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TABLE OF CONTENTS

|       |                                                                                        | Page   |
|------------|---------------------------------------------------------------------------------------------|--------|
| PART I     | FINANCIAL INFORMATION                                                                       |   |
| Item 1.    | Consolidated Financial Statements                                                           |   |
|       | Statements of Condition                                                                     | 1      |
|       | Statements of Income                                                                        | 2      |
|       | Statements of Comprehensive Income (Loss)                                                   | 3      |
|       | Statements of Stockholders’ Equity                                                    | 4      |
|       | Statements of Cash Flows                                                                    | 5      |
|       | Notes to Consolidated Financial Statements                                                  | 7      |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25     |
| Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                                  | 44     |
| Item 4.    | Controls and Procedures                                                                     | 46     |
|       |                                                                                        |   |
| PART II    | OTHER INFORMATION                                                                           |   |
| Item 1.    | Legal Proceedings                                                                           | 46     |
| Item 1A.   | Risk Factors                                                                                | 46     |
| Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 47     |
| Item 3.    | Defaults Upon Senior Securities                                                             | 47     |
| Item 4.    | Submission of Matters to a Vote of Security Holders                                         | 47     |
| Item 5.    | Other Information                                                                           | 48     |
| Item 6.    | Exhibits                                                                                    | 48     |
|       |                                                                                        |
| SIGNATURES | 48                                                                                          |

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Table of Contents

PART 

|                                                                                                            |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                            |   | June 30, |   |   | December 31, |   |
|                                                                                                            |   | 2009 |   |   | 2008 |   |
|                                                                                                            |   | (UNAUDITED) |   |   |   |   |
| ASSETS                                                                                                          |   |   |   |   |   |   |
| Cash and due from banks                                                                                         |   | $ | 11,892,123 |   |   | $ | 18,104,521 |   |
| Interest-bearing deposits in other banks                                                                        |   |   | 118,608,522 |   |   |   | 118,244,771 |   |
| Federal funds sold                                                                                              |   |   | 3,651 |   |   |   | 1,054,719 |   |
| Investment securities                                                                                           |   |   | 148,566,804 |   |   |   | 185,773,315 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| Loans                                                                                                           |   |   | 919,697,759 |   |   |   | 956,687,391 |   |
| Allowance for loan losses                                                                                       |   |   | (19,718,564 | ) |   |   | (19,373,625 | ) |
| Net loans                                                                                                       |   |   | 899,979,195 |   |   |   | 937,313,766 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| Premises and equipment, net                                                                                     |   |   | 19,332,547 |   |   |   | 19,984,288 |   |
| Goodwill                                                                                                        |   |   | 5,984,604 |   |   |   | 5,984,604 |   |
| Cash value of bank-owned life insurance policies                                                                |   |   | 12,583,977 |   |   |   | 12,302,586 |   |
| Foreclosed assets                                                                                               |   |   | 37,416,572 |   |   |   | 25,268,901 |   |
| Other assets                                                                                                    |   |   | 22,647,577 |   |   |   | 26,071,460 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| Total assets                                                                                                    |   | $ | 1,277,015,572 |   |   | $ | 1,350,102,931 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                            |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                       |   |   |   |   |   |   |   |   |
| Noninterest-bearing demand                                                                                      |   | $ | 108,973,319 |   |   | $ | 91,114,337 |   |
| Interest-bearing demand and savings                                                                             |   |   | 245,459,170 |   |   |   | 252,122,046 |   |
| Time                                                                                                            |   |   | 681,949,640 |   |   |   | 780,466,875 |   |
| Total deposits                                                                                                  |   |   | 1,036,382,129 |   |   |   | 1,123,703,258 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| Federal funds purchased and securities sold under agreements to repurchase                                      |   |   | 10,810,164 |   |   |   | 8,954,253 |   |
| Advances from the Federal Home Loan Bank of Atlanta                                                             |   |   | 105,449,531 |   |   |   | 109,703,917 |   |
| Guaranteed preferred beneficial interests in debentures (trust preferred securities)                            |   |   | 10,310,000 |   |   |   | 10,310,000 |   |
| Other borrowings                                                                                                |   |   | 20,000,000 |   |   |   | - |   |
| Other liabilities                                                                                               |   |   | 5,650,414 |   |   |   | 5,830,761 |   |
| Total liabilities                                                                                               |   |   | 1,188,602,238 |   |   |   | 1,258,502,189 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| Stockholders' equity:                                                                                           |   |   |   |   |   |   |   |   |
| Preferred stock, no par value; 1,500,000 shares authorized; no shares issued                                    |   |   | - |   |   |   | - |   |
| Common stock, no par value; 98,500,000 shares authorized; 9,324,407 and 9,324,407 shares issued and outstanding |   |   | 1,217,065 |   |   |   | 1,217,065 |   |
| Additional paid-in capital                                                                                      |   |   | 24,376,241 |   |   |   | 24,225,407 |   |
| Retained earnings                                                                                               |   |   | 62,513,852 |   |   |   | 62,467,000 |   |
| Accumulated other comprehensive income                                                                          |   |   | 306,176 |   |   |   | 3,691,270 |   |
| Total stockholders' equity                                                                                      |   |   | 88,413,334 |   |   |   | 91,600,742 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                      |   | $ | 1,277,015,572 |   |   | $ | 1,350,102,931 |   |

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Table of Contents

PAB 

|                                                |   |
|-----------------------------------------------------|--------|
|                                                |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|                                                |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and fees on loans                          |   | $ | 14,029,302 |   |   | $ | 15,140,028 |   |   | $ | 27,978,687 |   |   | $ | 31,796,825 |   |
| Interest and dividends on investment securities:    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                             |   |   | 1,834,927 |   |   |   | 1,901,665 |   |   |   | 3,725,354 |   |   |   | 3,894,714 |   |
| Nontaxable                                          |   |   | 153,645 |   |   |   | 335,506 |   |   |   | 383,802 |   |   |   | 663,089 |   |
| Other interest income                               |   |   | 72,329 |   |   |   | 82,924 |   |   |   | 153,020 |   |   |   | 135,969 |   |
| Total interest income                               |   |   | 16,090,203 |   |   |   | 17,460,123 |   |   |   | 32,240,863 |   |   |   | 36,490,597 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest on deposits                                |   |   | 6,725,648 |   |   |   | 7,461,664 |   |   |   | 14,386,604 |   |   |   | 15,879,025 |   |
| Interest on Federal Home Loan Bank advances         |   |   | 1,074,253 |   |   |   | 928,070 |   |   |   | 2,151,499 |   |   |   | 1,858,370 |   |
| Interest on other borrowings                        |   |   | 304,098 |   |   |   | 207,878 |   |   |   | 524,348 |   |   |   | 545,250 |   |
| Total interest expense                              |   |   | 8,103,999 |   |   |   | 8,597,612 |   |   |   | 17,062,451 |   |   |   | 18,282,645 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                 |   |   | 7,986,204 |   |   |   | 8,862,511 |   |   |   | 15,178,412 |   |   |   | 18,207,952 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                           |   |   | 2,000,000 |   |   |   | 1,050,000 |   |   |   | 3,750,000 |   |   |   | 2,250,000 |   |
| Net interest income after provision for loan losses |   |   | 5,986,204 |   |   |   | 7,812,511 |   |   |   | 11,428,412 |   |   |   | 15,957,952 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                 |   |   | 865,949 |   |   |   | 977,822 |   |   |   | 1,681,978 |   |   |   | 1,882,726 |   |
| Other fee income                                    |   |   | 591,199 |   |   |   | 446,966 |   |   |   | 1,028,731 |   |   |   | 894,649 |   |
| Securities transactions, net                        |   |   | 755,910 |   |   |   | 16,833 |   |   |   | 772,500 |   |   |   | 200,217 |   |
| Gain (loss) on sale and write-down of other assets  |   |   | (394,216 | ) |   |   | (42,405 | ) |   |   | (521,570 | ) |   |   | (108,443 | ) |
| Gain (loss) on derivative instruments               |   |   | 386,825 |   |   |   | - |   |   |   | 1,168,911 |   |   |   | - |   |
| Other noninterest income                            |   |   | 280,878 |   |   |   | 172,568 |   |   |   | 461,758 |   |   |   | 345,862 |   |
| Total other income                                  |   |   | 2,486,545 |   |   |   | 1,571,784 |   |   |   | 4,592,308 |   |   |   | 3,215,011 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expenses                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                      |   |   | 4,035,349 |   |   |   | 4,524,952 |   |   |   | 8,675,123 |   |   |   | 9,537,056 |   |
| Occupancy expense of premises                       |   |   | 579,146 |   |   |   | 648,465 |   |   |   | 1,187,280 |   |   |   | 1,247,515 |   |
| Furniture and equipment expense                     |   |   | 497,783 |   |   |   | 521,613 |   |   |   | 1,002,122 |   |   |   | 1,046,128 |   |
| Other noninterest expense                           |   |   | 2,989,310 |   |   |   | 1,496,083 |   |   |   | 5,362,886 |   |   |   | 3,189,694 |   |
| Total other expenses                                |   |   | 8,101,588 |   |   |   | 7,191,113 |   |   |   | 16,227,411 |   |   |   | 15,020,393 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income tax expense (benefit)   |   |   | 371,161 |   |   |   | 2,193,182 |   |   |   | (206,691 | ) |   |   | 4,152,570 |   |
| Income tax expense (benefit)                        |   |   | 29,623 |   |   |   | 729,641 |   |   |   | (253,543 | ) |   |   | 1,391,555 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                          |   | $ | 341,538 |   |   | $ | 1,463,541 |   |   | $ | 46,852 |   |   | $ | 2,761,015 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per common share                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                               |   | $ | 0.04 |   |   | $ | 0.16 |   |   | $ | 0.01 |   |   | $ | 0.30 |   |
| Diluted                                             |   | $ | 0.04 |   |   | $ | 0.15 |   |   | $ | 0.01 |   |   | $ | 0.29 |   |

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Table of Contents

PAB 

|                                                                                                                                                                                               |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                               |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|                                                                                                                                                                                               |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                                         |   | $ | 341,538 |   |   | $ | 1,463,541 |   |   | $ | 46,852 |   |   | $ | 2,761,015 |   |
|                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss:                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized loss on cash flow hedge during the period, net of tax of $366,368 and $451,660 for the quarter and $569,642 and $24,731 for the year to date                                            |   |   | (711,186 | ) |   |   | (838,798 | ) |   |   | (1,105,775 | ) |   |   | (45,930 | ) |
| Reclassification adjustment for gains on cash flow hedge included in net income, net of tax of $131,521 and $0 for the quarter and $397,430 and $0 for the year to date                            |   |   | (255,304 | ) |   |   | - |   |   |   | (771,481 | ) |   |   | - |   |
| Unrealized holding losses on securities available for sale arising during the period, net of tax benefit of $622,445 and $1,521,996 for the quarter and $514,113 and $772,915 for the year to date |   |   | (1,230,512 | ) |   |   | (2,826,567 | ) |   |   | (997,988 | ) |   |   | (1,435,415 | ) |
| Reclassification adjustment for gains on securities available for sale included in net income, net of tax of $264,569 and $5,892 for the quarter and $262,650 and $70,076 for the year to date     |   |   | (491,341 | ) |   |   | (10,941 | ) |   |   | (509,850 | ) |   |   | (130,141 | ) |
|                                                                                                                                                                                               |   |   | (2,688,343 | ) |   |   | (3,676,306 | ) |   |   | (3,385,094 | ) |   |   | (1,611,486 | ) |
|                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                                                                                                                                                        |   | $ | (2,346,805 | ) |   | $ | (2,212,765 | ) |   | $ | (3,338,242 | ) |   | $ | 1,149,529 |   |

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Table of Contents

BANKSHARES

|                                                     |   |
|----------------------------------------------------------|--------|
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                     |   |   |   |   |   |   |   | Additional |   |   |   |   |   | Other |   |   |   |   |
|                                                     |   | Common Stock |   |   | Paid-in |   |   | Retained |   |   | Comprehensive |   |   |   |   |
|                                                     |   | Shares |   |   | Amount |   |   | Capital |   |   | Earnings |   |   | Income |   |   | Total |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2007                               |   |   | 9,223,217 |   |   | $ | 1,217,065 |   |   | $ | 22,792,940 |   |   | $ | 72,822,852 |   |   | $ | 843,115 |   |   | $ | 97,675,972 |   |
| Net loss                                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,911,265 | ) |   |   | - |   |   |   | (5,911,265 | ) |
| Other comprehensive income                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,848,155 |   |   |   | 2,848,155 |   |
| Cash dividends declared, $0.24 per share                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,195,622 | ) |   |   | - |   |   |   | (2,195,622 | ) |
| 2% stock dividend declared                               |   |   | 183,739 |   |   |   | - |   |   |   | 2,248,965 |   |   |   | (2,248,965 | ) |   |   | - |   |   |   | - |   |
| Stock acquired and cancelled under stock repurchase plan |   |   | (86,065 | ) |   |   | - |   |   |   | (1,162,521 | ) |   |   | - |   |   |   | - |   |   |   | (1,162,521 | ) |
| Stock-based compensation                                 |   |   | - |   |   |   | - |   |   |   | 310,043 |   |   |   | - |   |   |   | - |   |   |   | 310,043 |   |
| Stock options exercised                                  |   |   | 3,516 |   |   |   | - |   |   |   | 35,980 |   |   |   | - |   |   |   | - |   |   |   | 35,980 |   |
| Balance, December 31, 2008                               |   |   | 9,324,407 |   |   |   | 1,217,065 |   |   |   | 24,225,407 |   |   |   | 62,467,000 |   |   |   | 3,691,270 |   |   |   | 91,600,742 |   |
| Net income                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 46,852 |   |   |   | - |   |   |   | 46,852 |   |
| Other comprehensive loss                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,385,094 | ) |   |   | (3,385,094 | ) |
| Stock-based compensation                                 |   |   | - |   |   |   | - |   |   |   | 150,834 |   |   |   | - |   |   |   | - |   |   |   | 150,834 |   |
| Balance, June 30, 2009                                   |   |   | 9,324,407 |   |   | $ | 1,217,065 |   |   | $ | 24,376,241 |   |   | $ | 62,513,852 |   |   | $ | 306,176 |   |   | $ | 88,413,334 |   |

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Table of Contents

PAB 

|                                                                                               |   | Six Months Ended June 30, |        |
|----------------------------------------------------------------------------------------------------|--------|---------------------------|-------------|
|                                                                                               |   | 2009                      |        |   | 2008 |   |
|                                                                                               |   |                      |        |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                               |   |                      |        |   |   |   |
| Net income                                                                                         |   | $                         | 46,852      |   |   | $ | 2,761,015 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                  |   |                      |        |   |   |   |   |   |
| Depreciation, amortization and accretion, net                                                      |   |                      | 744,790     |   |   |   | 836,656 |   |
| Provision for loan losses                                                                          |   |                      | 3,750,000   |   |   |   | 2,250,000 |   |
| Net realized gain on securities transactions                                                       |   |                      | (772,500    | ) |   |   | (200,217 | ) |
| Loss on disposal of assets                                                                         |   |                      | 521,570     |   |   |   | 108,643 |   |
| Stock-based compensation expense                                                                   |   |                      | 150,834     |   |   |   | 173,192 |   |
| Increase in cash value of bank-owned life insurance                                                |   |                      | (281,391    | ) |   |   | (210,507 | ) |
| Increase (decrease) in deferred compensation accrual                                               |   |                      | 36,566      |   |   |   | (81,724 | ) |
| Net realized gain on derivative instruments                                                        |   |                      | (1,168,911  | ) |   |   | - |   |
| Net change in taxes receivable and taxes payable                                                   |   |                      | 2,619,494   |   |   |   | (398,445 | ) |
| Decrease in interest receivable                                                                    |   |                      | 379,655     |   |   |   | 1,438,752 |   |
| Decrease in interest payable                                                                       |   |                      | (189,250    | ) |   |   | (337,869 | ) |
| Net increase in prepaid expenses and other assets                                                  |   |                      | (1,763,912  | ) |   |   | (1,914,662 | ) |
| Net decrease in accrued expenses and other liabilities                                             |   |                      | (27,663     | ) |   |   | (1,134,353 | ) |
| Net cash provided by operating activities                                                          |   |                      | 4,046,134   |   |   |   | 3,290,481 |   |
|                                                                                               |   |                      |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                               |   |                      |        |   |   |   |   |   |
| Increase  in interest-bearing deposits in other banks                                    |   |                      | (363,751    | ) |   |   | (47,868 | ) |
| Decrease in federal funds sold                                                                     |   |                      | 1,051,068   |   |   |   | 183,854 |   |
| Purchase of debt securities                                                                        |   |                      | (44,313,619 | ) |   |   | (32,221,423 | ) |
| Proceeds from sales of debt securities                                                             |   |                      | 55,856,184  |   |   |   | 24,417,488 |   |
| Proceeds from calls of debt securities                                                             |   |                      | 10,532,000  |   |   |   | 16,102,927 |   |
| Proceeds from maturities and paydowns of debt securities                                           |   |                      | 13,778,104  |   |   |   | 7,360,948 |   |
| Purchase of equity investments                                                                     |   |                      | (284,256    | ) |   |   | (1,211,083 | ) |
| Redemption of equity investments                                                                   |   |                      | 94,700      |   |   |   | 452,100 |   |
| Net (increase) decrease in loans                                                                   |   |                      | 17,238,686  |   |   |   | (47,300,029 | ) |
| Purchase of premises and equipment                                                                 |   |                      | (559,382    | ) |   |   | (496,708 | ) |
| Proceeds from disposal of assets                                                                   |   |                      | 4,154,394   |   |   |   | 1,965,735 |   |
| Net cash provided by (used in) investing activities                                                |   |                      | 57,184,128  |   |   |   | (30,794,059 | ) |
|                                                                                               |   |                      |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                               |   |                      |        |   |   |   |   |   |
| Net increase (decrease) in deposits                                                                |   |                      | (87,321,129 | ) |   |   | 16,445,574 |   |
| Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements |   |                      | 1,855,911   |   |   |   | (2,997,973 | ) |
| Advances from the Federal Home Loan Bank                                                           |   |                      | -           |   |   |   | 31,000,000 |   |
| Payments on Federal Home Loan Bank advances                                                        |   |                      | (4,254,386  | ) |   |   | (17,298,438 | ) |
| Proceeds from other borrowings                                                                     |   |                      | 20,000,000  |   |   |   |   |   |
| Proceeds from termination of cash flow hedge derivative instrument                                 |   |                      | 2,276,944   |   |   |   |   |   |
| Dividends paid                                                                                     |   |                      | -           |   |   |   | (2,664,626 | ) |
| Proceeds from the exercise of stock options                                                        |   |                      | -           |   |   |   | 35,980 |   |
| Acquisition of stock under stock repurchase plans                                                  |   |                      | -           |   |   |   | (1,162,521 | ) |
| Purchase of cash flow hedge derivative instrument                                                  |   |                      | -           |   |   |   | (786,000 | ) |
| Net cash provided by (used in) financing activities                                                |   |                      | (67,442,660 | ) |   |   | 22,571,996 |   |

----

Table of Contents

|                                                          |   |
|---------------------------------------------------------------|--------|
|                                                          |   | Six Months Ended June 30, |   |
|                                                          |   | 2009 |   |   | 2008 |   |
|                                                          |   |   |   |   |   |   |
| Net decrease in cash and due from banks                       |   | $ | (6,212,398 | ) |   | $ | (4,931,582 | ) |
|                                                          |   |   |   |   |   |   |   |   |
| Cash and due from banks at beginning of period                |   |   | 18,104,521 |   |   |   | 29,451,700 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Cash and due from banks at end of period                      |   | $ | 11,892,123 |   |   | $ | 24,520,118 |   |
|                                                          |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION             |   |   |   |   |   |   |   |   |
| Cash paid (received) during the period for:                   |   |   |   |   |   |   |   |   |
| Interest                                                      |   | $ | 17,251,701 |   |   | $ | 18,620,514 |   |
| Taxes                                                         |   | $ | (2,873,037 | ) |   | $ | 1,795,000 |   |
|                                                          |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |   |   |   |   |
| NONCASH INVESTING AND FINANCING TRANSACTIONS                  |   |   |   |   |   |   |   |   |
| Decrease in unrealized gains on securities available for sale |   | $ | (2,284,602 | ) |   | $ | (2,408,547 | ) |
| Decrease in unrealized gain on cash flow hedge                |   | $ | (2,844,328 | ) |   | $ | (70,660 | ) |
| Transfer of loans to foreclosed assets                        |   | $ | 16,345,885 |   |   | $ | 4,296,125 |   |

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| Banking Locations               | Number of Banking Offices |
|---------------------------------|---------------------------|
| South Georgia Market:           |                      |   |
| Valdosta, Lowndes County        |                      | 3 (including the main office) |
| Lake Park, Lowndes County       |                      | 1 |
| Adel, Cook County               |                      | 1 |
| Bainbridge, Decatur County      |                      | 3 |
| Cairo, Grady County             |                      | 1 |
| Statesboro, Bulloch County      |                      | 2 |
| Baxley, Appling County          |                      | 1 |
| Hazlehurst, Jeff Davis County   |                      | 1 |
| North Georgia Market:           |                      |   |
| McDonough, Henry County         |                      | 1 |
| Stockbridge, Henry County       |                      | 1 |
| Oakwood, Hall County            |                      | 1 |
| Athens, Oconee County           |                      | 1 |
| Cumming, Forsyth County         |                      | 1 (loan production office) |
| Florida Market:                 |                      |   |
| Ocala, Marion County            |                      | 1 |
| St. Augustine, St. Johns County |                      | 1 (loan production office) |

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|                               |   | Amortized Cost |        |   | Gross Unrealized Gains |   |      | Gross Unrealized Losses |   |   | Fair Value |   |
|------------------------------------|--------|----------------|-------------|--------|------------------------|--------|-----------|-------------------------|--------|--------|------------|--------|
| June 30, 2009                      |   |           |        |   |                   |   |      |                    |   |   |       |   |
| U.S. Government sponsored agencies |   | $              | 21,685,860  |   |                   | $      | 203,901   |                    |   | $      | (105,085   | )      |   | $ | 21,784,676 |   |
| State and municipal securities     |   |           | 13,917,719  |   |                   |   | 65,774    |                    |   |   | (839,470   | )      |   |   | 13,144,023 |   |
| Mortgage-backed securities         |   |           | 97,823,242  |   |                   |   | 1,736,906 |                    |   |   | (632,130   | )      |   |   | 98,928,018 |   |
| Corporate debt securities          |   |           | 5,502,202   |   |                   |   | 50,940    |                    |   |   | (507,259   | )      |   |   | 5,045,883 |   |
| Equity securities                  |   |           | 9,657,550   |   |                   |   | 6,654     |                    |   |   | -          |   |   |   | 9,664,204 |   |
|                               |   | $              | 148,586,573 |   |                   | $      | 2,064,175 |                    |   | $      | (2,083,944 | )      |   | $ | 148,566,804 |   |
|                               |   |           |        |   |                   |   |      |                    |   |   |       |   |   |   |   |   |
| December 31, 2008                  |   |           |        |   |                   |   |      |                    |   |   |       |   |   |   |   |   |
| U.S. Government sponsored agencies |   | $              | 34,425,092  |   |                   | $      | 878,996   |                    |   | $      | (947       | )      |   | $ | 35,303,141 |   |
| State and municipal securities     |   |           | 31,591,669  |   |                   |   | 151,276   |                    |   |   | (1,381,782 | )      |   |   | 30,361,163 |   |
| Mortgage-backed securities         |   |           | 100,306,541 |   |                   |   | 3,196,157 |                    |   |   | (89,246    | )      |   |   | 103,413,452 |   |
| Corporate debt securities          |   |           | 7,456,382   |   |                   |   | 69,975    |                    |   |   | (561,857   | )      |   |   | 6,964,500 |   |
| Equity securities                  |   |           | 9,728,798   |   |                   |   | 2,261     |                    |   |   | -          |   |   |   | 9,731,059 |   |
|                               |   | $              | 183,508,482 |   |                   | $      | 4,298,665 |                    |   | $      | (2,033,832 | )      |   | $ | 185,773,315 |   |

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|                       |   | AmortizedCost |        |   | FairValue |   |
|----------------------------|--------|---------------|-------------|--------|-----------|--------|
| Due in one year or less    |   | $             | -           |   |      | $      | - |   |
| Due from one to five years |   |          | 2,260,415   |   |      |   | 2,144,417 |   |
| Due from five to ten years |   |          | 8,869,391   |   |      |   | 8,814,742 |   |
| Due after ten years        |   |          | 29,975,976  |   |      |   | 29,015,424 |   |
| Mortgage-backed securities |   |          | 97,823,241  |   |      |   | 98,928,017 |   |
| Equity securities          |   |          | 9,657,550   |   |      |   | 9,664,204 |   |
|                       |   | $             | 148,586,573 |   |      | $      | 148,566,804 |   |

|                                                |   | Three Months ended June 30, |      |   | Six Months ended June 30 |   |
|-----------------------------------------------------|--------|-----------------------------|-----------|--------|--------------------------|--------|
|                                                |   | 2009                        |      |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
| Gross gains on securities transactions              |   | $                           | 1,051,551 |   |                     | $      | 22,730 |   |   | $ | 1,398,762 |   |   | $ | 251,341 |   |
| Gross losses on securities transactions             |   |                        | (295,641  | )      |                     |   | (5,897 | ) |   |   | (626,262 | ) |   |   | (51,124 | ) |
| Net realized gain (loss) on securities transactions |   | $                           | 755,910   |   |                     | $      | 16,833 |   |   | $ | 772,500 |   |   | $ | 200,217 |   |

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|                                  |   | Less than Twelve Months |       |   | Twelve Months or Longer |   |
|---------------------------------------|--------|-------------------------|------------|--------|-------------------------|--------|
| June 30, 2009                         |   | Fair Value              |       |   | Unrealized Losses       |   |   | Fair Value |   |   | Unrealized Losses |   |
| U.S. Government sponsored agencies    |   | $                       | 6,900,256  |   |                    | $      | 105,085 |   |   | $ | - |   |   | $ | - |   |
| State and municipal securities        |   |                    | 3,236,877  |   |                    |   | 188,680 |   |   |   | 4,713,321 |   |   |   | 650,790 |   |
| Mortgage-backed securities            |   |                    | 34,318,518 |   |                    |   | 610,082 |   |   |   | 667,736 |   |   |   | 22,048 |   |
| Corporate debt securities             |   |                    | -          |   |                    |   | - |   |   |   | 1,994,943 |   |   |   | 507,259 |   |
| Equity securities                     |   |                    | -          |   |                    |   | - |   |   |   | - |   |   |   | - |   |
| Total temporarily impaired securities |   | $                       | 44,455,651 |   |                    | $      | 903,847 |   |   | $ | 7,376,000 |   |   | $ | 1,180,097 |   |
|                                  |   |                    |       |   |                    |   |
| December 31, 2008                     |   |                    |       |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored agencies    |   | $                       | 3,019,053  |   |                    | $      | 947 |   |   | $ | - |   |   | $ | - |   |
| State and municipal securities        |   |                    | 18,905,887 |   |                    |   | 1,298,823 |   |   |   | 875,407 |   |   |   | 82,959 |   |
| Mortgage-backed securities            |   |                    | 2,176,031  |   |                    |   | 8,209 |   |   |   | 1,606,997 |   |   |   | 81,037 |   |
| Corporate debt securities             |   |                    | 2,491,548  |   |                    |   | 534,776 |   |   |   | 470,462 |   |   |   | 27,081 |   |
| Equity securities                     |   |                    | -          |   |                    |   | - |   |   |   | - |   |   |   | - |   |
| Total temporarily impaired securities |   | $                       | 26,592,519 |   |                    | $      | 1,842,755 |   |   | $ | 2,952,866 |   |   | $ | 191,077 |   |

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|                                               |   | Three Months Ended June 30, |      |   | Six Months Ended June 30, |   |
|----------------------------------------------------|--------|-----------------------------|-----------|--------|---------------------------|--------|
|                                               |   | 2009                        |      |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
| Basic earnings per share:                          |   |                        |      |   |                      |   |   |   |   |   |   |   |
| Net income                                         |   | $                           | 341,538   |   |                      | $      | 1,463,541 |   |   | $ | 46,852 |   |   | $ | 2,761,015 |   |
|                                               |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding         |   |                        | 9,324,407 |   |                      |   | 9,328,241 |   |   |   | 9,324,407 |   |   |   | 9,346,466 |   |
|                                               |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per common share                          |   | $                           | 0.04      |   |                      | $      | 0.16 |   |   | $ | 0.01 |   |   | $ | 0.30 |   |
|                                               |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per share:                        |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                         |   | $                           | 341,538   |   |                      | $      | 1,463,541 |   |   | $ | 46,852 |   |   | $ | 2,761,015 |   |
|                                               |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding         |   |                        | 9,324,407 |   |                      |   | 9,328,241 |   |   |   | 9,324,407 |   |   |   | 9,346,466 |   |
| Effect of dilutive stock options                   |   |                        | -         |   |                      |   | 47,945 |   |   |   | - |   |   |   | 54,246 |   |
| Weighted average diluted common shares outstanding |   |                        | 9,324,407 |   |                      |   | 9,376,186 |   |   |   | 9,324,407 |   |   |   | 9,400,712 |   |
|                                               |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per common share                          |   | $                           | 0.04      |   |                      | $      | 0.15 |   |   | $ | 0.01 |   |   | $ | 0.29 |   |

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|                                                                   | Asset Derivatives      |   | Liability Derivatives   |   |
|------------------------------------------------------------------------|------------------------|--------|-------------------------|--------|
|                                                                   | As of June 30, 2009    |   | As of December 31, 2008 |   | As of June 30, 2009 |   | As of December 31, 2008 |   |
|                                                                   | Balance Sheet Location |   | Fair Value              |   | Balance Sheet Location |   | Fair Value |   | Balance Sheet Location |   | Fair Value |   | Balance Sheet Location |   | Fair Value |   |
| Derivatives designated as hedging instruments under SFAS 133:     |                   |   |                    |   |   |
| Interest Rate Products                                                 | Other Assets           |   | $                       | 60,315 |   | Other Assets |   | $ | 3,992,797 |   | Other Liabilities |   |   | - |   | Other Liabilities |   |   | - |   |
|                                                                   |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total derivatives designated as hedging instruments under SFAS 133     |                   | $      | 60,315                  |   |   |   | $ | 3,992,797 |   |   |   |   | - |   |   |   |   | - |   |
|                                                                   |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives not designated as hedging instruments under SFAS 133:      |
|                                                                   |
| Interest Rate Products                                                 | Other Assets           |   |                    | -      |   | Other Assets |   |   | - |   | Other Liabilities |   |   | - |   | Other Liabilities |   |   | - |   |
|                                                                   |                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total derivatives not designated as hedging instruments under SFAS 133 |                   |   | -                       |   |   |   |   | - |   |   |   |   | - |   |   |   |   | - |   |

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| Derivatives in SFAS 133 |   | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |     | Location of Gain or (Loss) Reclassified from Accumulated OCI into |   | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |     | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded |            | Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   |
|-------------------------|--------|------------------------------------------------------------------------------|----------|-------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------------|-----------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Cash FlowHedging        |   | Three Months EndedJune 30,                                                   |     | Income(Effective                                                  |   | Three Months EndedJune 30,                                                                 |     | fromEffectiveness                                                                                      |            | Three Months EndedJune 30,                                                                                                       |   |
| Relationships           |   | 2009                                                                         |     |                                                              | 2008   |                                                                                       | Portion) |                                                                                                   | 2009            |                                                                                                                             |   | 2008 |   | Testing) |   | 2009 |   |   | 2008 |   |
|                    |   |                                                                         |     |                                                              |   |                                                                                       |     |                                                                                                   |            |                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Products  |   | $                                                                            | (109,626 | )                                                                 |   | $                                                                                          | (553,688 | )                                                                                                      | Interest Income |                                                                                                                             | $      | 718,333 |   |   | $ | 406,769 |   | Other Income |   | $ | (21,970 | ) |   |   | - |   |
|                    |   |                                                                         |     |                                                              |   |                                                                                       |     |                                                                                                   | Other Income    |                                                                                                                             |   | 603,123 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                   |   | $                                                                            | (109,626 | )                                                                 |   | $                                                                                          | (553,688 | )                                                                                                      |            |                                                                                                                             | $      | 1,321,456 |   |   | $ | 406,769 |   |   |   | $ | (21,970 | ) |   |   | - |   |

| Derivatives in SFAS 133 |   | Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |    | Location of Gain or (Loss) Reclassified from Accumulated OCI into |   | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |      | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded |                    | Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   |
|-------------------------|--------|------------------------------------------------------------------------------|---------|-------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|-----------|--------------------------------------------------------------------------------------------------------|-------------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Cash FlowHedging        |   | Six Months Ended June 30,                                               |    | Income(Effective                                                  |   | Six Months EndedJune 30,                                                                   |      | fromEffectiveness                                                                                      |                    | Six Months EndedJune 30,                                                                                                         |   |
| Relationships           |   | 2009                                                                         |    |                                                              | 2008   |                                                                                       | Portion)  |                                                                                                   | 2009                    |                                                                                                                             |   | 2008 |   | Testing) |   | 2009 |   |   | 2008 |   |
|                    |   |                                                                         |    |                                                              |   |                                                                                       |      |                                                                                                   |                    |                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Products  |   | $                                                                            | (60,029 | )                                                                 |   | $                                                                                          | 1,334,109 |                                                                                                   | Interest Income         |                                                                                                                             | $      | 1,478,092 |   |   | $ | 617,214 |   | Other Income |   | $ | (21,354 | ) |   |   | - |   |
|                    |   |                                                                         |    |                                                              |   |                                                                                       |      |                                                                                                   | Other  Income |                                                                                                                             |   | 1,295,393 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                   |   | $                                                                            | (60,029 | )                                                                 |   | $                                                                                          | 1,334,109 |                                                                                                   |                    |                                                                                                                             | $      | 2,773,485 |   |   | $ | 617,214 |   |   |   | $ | (21,354 | ) |   |   | - |   |

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|                                                             |                                                          |   | Amount of Gain or (Loss) Recognized in Income on DerivativeThree Months Ended June 30, |     |
|------------------------------------------------------------------|---------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|----------|
| Derivatives Not Designated as Hedging Instruments Under SFAS 133 | Location of Gain or (Loss) Recognized in Income on Derivative |   | 2009                                                                                   |     |   | 2008 |   |
|                                                             |                                                          |   |                                                                                   |     |   |   |   |
| Interest Rate Products                                           | Other Income / Expense                                        |   | $                                                                                      | (270,274 | ) |   |   | - |   |
|                                                             |                                                          |   |                                                                                   |     |   |   |   |   |   |
| Total                                                            |                                                          |   | $                                                                                      | (270,274 | ) |   |   | - |   |

|                                                             |                                                          |   | Amount of Gain or (Loss) Recognized in Income on DerivativeSix Months Ended June 30, |     |
|------------------------------------------------------------------|---------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|----------|
| Derivatives Not Designated as Hedging Instruments Under SFAS 133 | Location of Gain or (Loss) Recognized in Income on Derivative |   | 2009                                                                                 |     |   | 2008 |   |
|                                                             |                                                          |   |                                                                                 |     |   |   |   |
| Interest Rate Products                                           | Other Income / Expense                                        |   | $                                                                                    | (137,150 | ) |   |   | - |   |
|                                                             |                                                          |   |                                                                                 |     |   |   |   |   |   |
| Total                                                            |                                                          |   | $                                                                                    | (137,150 | ) |   |   | - |   |

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|                                     |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |    |   | Significant Other Observable Inputs(Level 2) |   |        | Significant Unobservable Inputs(Level 3) |   |   | Total  |   |
|------------------------------------------|--------|---------------------------------------------------------------|---------|--------|----------------------------------------------|--------|-------------|------------------------------------------|--------|--------|--------|--------|
| Assets                                   |   |                                                          |    |   |                                         |   |        |                                     |   |   |   |   |
| Investment securities available-for-sale |   | $                                                             | 587,104 |   |                                         | $      | 147,979,699 |                                     |   | $      | -      |   |   | $ | 148,566,803 |   |
| Derivative financial instruments         |   |                                                          | -       |   |                                         |   | 60,315      |                                     |   |   | -      |   |   |   | 60,315 |   |
| Total assets at fair value               |   | $                                                             | 587,104 |   |                                         | $      | 148,040,014 |                                     |   | $      | -      |   |   | $ | 148,627,118 |   |

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|                                               |   | Carrying value at June 30, 2009                               |   |   |                                         |   |      |                                     |   |
|----------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|----------------------------------------------|--------|-----------|------------------------------------------|--------|
|                                               |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |      | Significant Unobservable Inputs(Level 3) |   |   | Total |   |   | Total losses for the three months endedJune 30, 2009 |   |   | Total losses for the six months endedJune 30, 2009 |   |
|                                               |   |                                                          |   |   |                                         |   |      |                                     |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                                     |   | $                                                             | -      |   |                                         | $      | -         |                                     |   | $ | 63,843,400 |   |   | $ | 63,842,400 |   |   | $ | - |   |   | $ | - |   |
| Foreclosed assets                                  |   |                                                          | -      |   |                                         |   | 7,826,199 |                                     |   |   | 29,585,873 |   |   |   | 37,412,072 |   |   |   | (394,216 | ) |   |   | (517,579 | ) |
| Total fair value of assets on a nonrecurring basis |   | $                                                             | -      |   |                                         | $      | 7,826,199 |                                     |   | $ | 93,429,273 |   |   | $ | 101,255,472 |   |   | $ | (394,216 | ) |   | $ | (517,579 | ) |

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|                                                                                                |   | June 30, 2009  |          |   | December 31, 2008 |   |
|-----------------------------------------------------------------------------------------------------|--------|----------------|---------------|--------|-------------------|--------|
|                                                                                                |   | CarryingAmount |          |   | FairValue         |   |   | CarryingAmount |   |   | FairValue |   |
| Cash and balances due from banks, interest-bearing deposits with other banks and federal funds sold |   | $              | 130,504,000   |   |              | $      | 130,504,000 |   |   | $ | 137,404,000 |   |   | $ | 137,404,000 |   |
| Investment securities                                                                               |   |           | 148,567,000   |   |              |   | 148,567,000 |   |   |   | 185,773,000 |   |   |   | 185,773,000 |   |
| Loans, net                                                                                          |   |           | 899,979,000   |   |              |   | 903,586,000 |   |   |   | 937,314,000 |   |   |   | 940,533,000 |   |
| Cash flow hedge derivative instrument                                                               |   |           | 60,000        |   |              |   | 60,000 |   |   |   | 3,993,000 |   |   |   | 3,993,000 |   |
| Deposits                                                                                            |   |           | 1,036,382,000 |   |              |   | 1,041,521,000 |   |   |   | 1,123,703,000 |   |   |   | 1,134,568,000 |   |
| Federal funds purchased and securities sold under agreements to repurchase                          |   |           | 10,810,000    |   |              |   | 10,810,000 |   |   |   | 8,954,000 |   |   |   | 8,954,000 |   |
| Advances from the FHLB                                                                              |   |           | 105,450,000   |   |              |   | 103,440,000 |   |   |   | 109,704,000 |   |   |   | 106,847,000 |   |
| Other borrowings                                                                                    |   |           | 20,000,000    |   |              |   | 20,000,000 |   |   |   | - |   |   |   | - |   |
| Beneficial interest in debentures                                                                   |   |           | 10,310,000    |   |              |   | 10,310,000 |   |   |   | 10,310,000 |   |   |   | 10,310,000 |   |

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|                             |   | South Georgia  |    |   | North Georgia |   |    | Florida |   |   | Treasury |   |   | Total  |    |
|----------------------------------|--------|----------------|---------|--------|---------------|--------|---------|---------|--------|--------|----------|--------|--------|--------|---------|
|                             |   | (In thousands) |    |
| Three Months ended June 30, 2009 |   |           |    |   |          |   |    |    |   |   |     |   |   |
| Net interest income              |   |           | 3,909   |   |          |   | 2,994   |    |   |   | 474      |   |   |   | 609     |   |   |   | 7,986 |   |
| Provision for loan losses        |   |           | 284     |   |          |   | 1,914   |    |   |   | (87      | )      |   |   | (111    | ) |   |   | 2,000 |   |
| Noninterest income               |   |           | 1,076   |   |          |   | (193    | )       |   |   | 24       |   |   |   | 1,580   |   |   |   | 2,487 |   |
| Noninterest expense              |   |           | 2,539   |   |          |   | 1,846   |    |   |   | 438      |   |   |   | 3,279   |   |   |   | 8,102 |   |
| Income tax expense (benefit)     |   |           | 735     |   |          |   | (326    | )       |   |   | 50       |   |   |   | (429    | ) |   |   | 30 |   |
| Net income (loss)                |   |           | 1,427   |   |          |   | (633    | )       |   |   | 97       |   |   |   | (550    | ) |   |   | 341 |   |
| Total assets                     |   |           | 388,704 |   |          |   | 452,081 |    |   |   | 102,409  |   |   |   | 333,822 |   |   |   | 1,277,016 |   |
|                             |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Three Months ended June 30, 2008 |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Net interest income              |   |           | 4,525   |   |          |   | 3,189   |    |   |   | 856      |   |   |   | 293     |   |   |   | 8,863 |   |
| Provision for loan losses        |   |           | (1,809  | )      |          |   | 237     |    |   |   | 231      |   |   |   | 2,391   |   |   |   | 1,050 |   |
| Noninterest income               |   |           | 1,151   |   |          |   | 33      |    |   |   | 40       |   |   |   | 348     |   |   |   | 1,572 |   |
| Noninterest expense              |   |           | 2,358   |   |          |   | 1,227   |    |   |   | 507      |   |   |   | 3,099   |   |   |   | 7,191 |   |
| Income tax expense (benefit)     |   |           | 1,743   |   |          |   | 598     |    |   |   | 54       |   |   |   | (1,665  | ) |   |   | 730 |   |
| Net income (loss)                |   |           | 3,384   |   |          |   | 1,160   |    |   |   | 104      |   |   |   | (3,184  | ) |   |   | 1,464 |   |
| Total assets                     |   |           | 404,232 |   |          |   | 462,296 |    |   |   | 104,920  |   |   |   | 250,920 |   |   |   | 1,222,368 |   |
|                             |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Six Months ended June 30, 2009   |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Net interest income              |   |           | 7,682   |   |          |   | 5,512   |    |   |   | 1,240    |   |   |   | 744     |   |   |   | 15,178 |   |
| Provision for loan losses        |   |           | 1,783   |   |          |   | 5,084   |    |   |   | 835      |   |   |   | (3,952  | ) |   |   | 3,750 |   |
| Noninterest income               |   |           | 2,030   |   |          |   | (200    | )       |   |   | 59       |   |   |   | 2,703   |   |   |   | 4,592 |   |
| Noninterest expense              |   |           | 4,739   |   |          |   | 3,506   |    |   |   | 905      |   |   |   | 7,077   |   |   |   | 16,227 |   |
| Income tax expense (benefit)     |   |           | 1,085   |   |          |   | (1,115  | )       |   |   | (150     | )      |   |   | (74     | ) |   |   | (254 | ) |
| Net income (loss)                |   |           | 2,105   |   |          |   | (2,163  | )       |   |   | (291     | )      |   |   | 396     |   |   |   | 47 |   |
|                             |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Six Months ended June 30, 2008   |   |           |    |   |          |   |    |    |   |   |     |   |   |   |    |   |   |
| Net interest income              |   |           | 8,992   |   |          |   | 6,683   |    |   |   | 1,799    |   |   |   | 734     |   |   |   | 18,208 |   |
| Provision for loan losses        |   |           | (1,388  | )      |          |   | 1,968   |    |   |   | 319      |   |   |   | 1,351   |   |   |   | 2,250 |   |
| Noninterest income               |   |           | 2,198   |   |          |   | 69      |    |   |   | 85       |   |   |   | 863     |   |   |   | 3,215 |   |
| Noninterest expense              |   |           | 4,994   |   |          |   | 2,718   |    |   |   | 1,058    |   |   |   | 6,250   |   |   |   | 15,020 |   |
| Income tax expense (benefit)     |   |           | 2,654   |   |          |   | 723     |    |   |   | 177      |   |   |   | (2,163  | ) |   |   | 1,392 |   |
| Net income (loss)                |   |           | 4,930   |   |          |   | 1,343   |    |   |   | 330      |   |   |   | (3,841  | ) |   |   | 2,761 |   |

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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------|---------------------------------------------------------------------------------------------|

| Market/County |   | NumberofOffices |   |   | TotalLoans1 |   |    | TotalDeposits1 |   |   | MarketShare (%)2 |   |   | MarketShareRank2 |   |
|---------------|--------|-----------------|--------|--------|-------------|--------|---------|----------------|--------|--------|------------------|--------|--------|------------------|--------|
|          |   |            |   |   |        |   |    |           |   |   |             |   |   |             |   |
| South Georgia |   |            |   |   |        |   |    |           |   |   |             |   |   |             |   |
| Lowndes       |   |            | 4      |   |        | $      | 240,280 |           |   | $      | 264,221          |   |   |             | 19.4   |   |   |   | 2 |   |
| Cook          |   |            | 1      |   |        |   | 12,575  |           |   |   | 47,888           |   |   |             | 26.2   |   |   |   | 2 |   |
| Decatur       |   |            | 3      |   |        |   | 47,244  |           |   |   | 109,033          |   |   |             | 32.2   |   |   |   | 1 |   |
| Grady         |   |            | 1      |   |        |   | 13,328  |           |   |   | 25,468           |   |   |             | 6.7    |   |   |   | 5 |   |
| Appling       |   |            | 1      |   |        |   | 14,879  |           |   |   | 39,294           |   |   |             | 16.0   |   |   |   | 4 |   |
| Jeff Davis    |   |            | 1      |   |        |   | 9,791   |           |   |   | 52,561           |   |   |             | 28.0   |   |   |   | 2 |   |
| Bulloch       |   |            | 2      |   |        |   | 34,160  |           |   |   | 59,964           |   |   |             | 4.6    |   |   |   | 6 |   |
|          |   |            | 13     |   |        | $      | 372,257 |           |   | $      | 598,429          |   |   |             |   |   |   |   |   |   |
| North Georgia |   |            |   |   |        |   |    |           |   |   |             |   |   |             |   |   |   |   |   |   |
| Henry         |   |            | 2      |   |        | $      | 221,844 |           |   | $      | 68,570           |   |   |             | 3.5    |   |   |   | 8 |   |
| Hall          |   |            | 1      |   |        |   | 91,297  |           |   |   | 28,582           |   |   |             | 1.0    |   |   |   | 14 |   |
| Oconee        |   |            | 1      |   |        |   | 46,227  |           |   |   | 13,476           |   |   |             | 1.8    |   |   |   | 8 |   |
| Forsyth       |   |            | 1      |   |        |   | 54,663  |           |   |   | 11,877           |   |   |             | -      |   |   |   | - |   |
|          |   |            | 5      |   |        | $      | 414,031 |           |   | $      | 122,505          |   |   |             |   |   |   |   |   |   |
|          |   |            |   |   |        |   |    |           |   |   |             |   |   |             |   |   |   |   |   |   |
| Florida       |   |            |   |   |        |   |    |           |   |   |             |   |   |             |   |   |   |   |   |   |
| Marion        |   |            | 1      |   |        | $      | 30,433  |           |   | $      | 163,152          |   |   |             | 3.4    |   |   |   | 7 |   |
| St. Johns     |   |            | 1      |   |        |   | 68,467  |           |   |   | 1,064            |   |   |             | -      |   |   |   | - |   |
|          |   |            | 2      |   |        | $      | 98,900  |           |   | $      | 164,216          |   |   |             |   |   |   |   |   |   |

| 1 | Dollar amounts are presented in thousands as of June 30, 2009.  Amounts exclude $34.5 million in loans and $151.2 million in deposits assigned to the “Treasury” that are not allocated to any particular market (i.e. participation loans, employee and director accounts, brokered deposits, official checks, etc.). |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Based on the FDIC/OTS Summary of Deposits report as of June 30, 2008. |
|---|-----------------------------------------------------------------------|

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|                       |   |        |        |   |        |   |   |        |   |   |         |   |   | Median 2008 |   |
|----------------------------|--------|-------------|-------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|-------------|--------|
| Market/                    |   | Total       |        |   | Population  |   |   | Employment  |   |   | Unemployment |   |   | Household   |   |
| County                     |   | Population1 |        |   | Growth (%)2 |   |   | Growth (%)3 |   |   | Rate (%)4    |   |   | Income ($)5 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |
| Selected Georgia Counties: |   |        |        |   |        |   |   |        |   |   |         |   |   |
| South Georgia:             |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |
| Appling                    |   |        | 17,975      |   |        |   | 3.19   |        |   |   | (5.0         | )      |   |        | 9.2    |   |   |   | 36,331 |   |
| Bulloch                    |   |        | 67,245      |   |        |   | 20.12  |        |   |   | (5.1         | )      |   |        | 8.3    |   |   |   | 36,805 |   |
| Cook                       |   |        | 16,662      |   |        |   | 5.65   |        |   |   | (5.1         | )      |   |        | 12.2   |   |   |   | 33,143 |   |
| Decatur                    |   |        | 29,732      |   |        |   | 5.28   |        |   |   | (5.1         | )      |   |        | 11.9   |   |   |   | 35,282 |   |
| Grady                      |   |        | 25,305      |   |        |   | 6.96   |        |   |   | (5.1         | )      |   |        | 9.2    |   |   |   | 34,959 |   |
| Jeff Davis                 |   |        | 13,235      |   |        |   | 4.34   |        |   |   | (5.2         | )      |   |        | 13.2   |   |   |   | 32,660 |   |
| Lowndes                    |   |        | 104,738     |   |        |   | 13.70  |        |   |   | (5.2         | )      |   |        | 7.8    |   |   |   | 41,368 |   |
| North Georgia:             |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| Forsyth                    |   |        | 175,192     |   |        |   | 78.03  |        |   |   | (5.3         | )      |   |        | 7.8    |   |   |   | 95,141 |   |
| Hall                       |   |        | 186,789     |   |        |   | 34.11  |        |   |   | (5.2         | )      |   |        | 8.6    |   |   |   | 57,026 |   |
| Henry                      |   |        | 202,104     |   |        |   | 69.35  |        |   |   | (5.3         | )      |   |        | 8.7    |   |   |   | 73,113 |   |
| Oconee                     |   |        | 34,510      |   |        |   | 31.59  |        |   |   | (5.1         | )      |   |        | 5.6    |   |   |   | 67,570 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| State of Georgia           |   |        | 9,932,949   |   |        |   | 21.33  |        |   |   | (5.3         | )      |   |        | 9.1    |   |   |   | 56,752 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| Selected Florida Counties: |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |
| Marion                     |   |        | 341,870     |   |        |   | 32.04  |        |   |   | (5.2         | )      |   |        | 12.0   |   |   |   | 39,870 |   |
| St. Johns                  |   |        | 188,194     |   |        |   | 52.84  |        |   |   | (5.2         | )      |   |        | 8.1    |   |   |   | 66,135 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| State of Florida           |   |        | 19,021,613  |   |        |   | 19.02  |        |   |   | (4.3         | )      |   |        | 9.3    |   |   |   | 50,509 |   |
|                       |   |        |        |   |        |   |   |        |   |   |         |   |   |        |   |   |   |   |   |   |
| National Total             |   |        | 309,731,508 |   |        |   | 10.06  |        |   |   | (3.5         | )      |   |        | 8.8    |   |   |   | 54,749 |   |

| 1 | Estimated 2009 poulation provided by SNL Financial. |
|---|-----------------------------------------------------|

| 2 | Estimated percentage population change from 2000 to 2009 provided by SNL Financial. |
|---|-------------------------------------------------------------------------------------|

| 3 | Total employment growth (not seasonally adjusted) for the Second Quarter 2009 year-to-date percentage change from the prior year’s year-to-date data provided by the Bureau of Labor Statistics Household Survey. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Unemployment rate (not seasonally adjusted) for the First Quarter 2009 provided by the Bureau of Labor Statistics. |
|---|--------------------------------------------------------------------------------------------------------------------|

| 5 | Based on actual 2008 market demographics provided by SNL Financial. |
|---|---------------------------------------------------------------------|

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|                                               |   | South                  |    |   | North   |   |    |    |   |   |     |   |   |   |    |
|----------------------------------------------------|--------|------------------------|---------|--------|---------|--------|---------|---------|--------|--------|----------|--------|--------|--------|---------|
| As of June  30, 2009                     |   | Georgia                |    |   | Georgia |   |    | Florida |   |   | Treasury |   |   | Total  |    |
|                                               |   | (Dollars in Thousands) |    |
| Loans                                              |   |                   |    |   |    |   |    |    |   |   |     |   |   |   |    |
| Commercial and financial                           |   | $                      | 30,994  |   |    | $      | 45,485  |    |   | $      | 2,024    |   |   | $      | 6,096   |   |   | $ | 84,599 |   |
| Agricultural (including loans secured by farmland) |   |                   | 35,931  |   |    |   | 3,360   |    |   |   | 6,483    |   |   |   | -       |   |   |   | 45,774 |   |
| Real estate - construction                         |   |                   | 74,154  |   |    |   | 158,161 |    |   |   | 56,024   |   |   |   | 2,610   |   |   |   | 290,949 |   |
| Real estate - commercial                           |   |                   | 93,038  |   |    |   | 157,735 |    |   |   | 25,062   |   |   |   | 9,896   |   |   |   | 285,731 |   |
| Real estate - residential                          |   |                   | 126,164 |   |    |   | 43,651  |    |   |   | 9,334    |   |   |   | 3,925   |   |   |   | 183,074 |   |
| Installment loans to individuals and other loans   |   |                   | 11,795  |   |    |   | 5,799   |    |   |   | 137      |   |   |   | 12,059  |   |   |   | 29,790 |   |
|                                               |   |                   | 372,076 |   |    |   | 414,191 |    |   |   | 99,064   |   |   |   | 34,586  |   |   |   | 919,917 |   |
| Deferred loan fees and unearned interest, net      |   |                   | 181     |   |    |   | (160    | )       |   |   | (164     | )      |   |   | (76     | ) |   |   | (219 | ) |
|                                               |   |                   | 372,257 |   |    | $      | 414,031 |    |   | $      | 98,900   |   |   | $      | 34,510  |   |   | $ | 919,698 |   |
| Allowance for loan losses                          |   |                   | (5,143  | )      |    |   | (10,917 | )       |   |   | (3,229   | )      |   |   | (430    | ) |   |   | (19,719 | ) |
| Net loans                                          |   | $                      | 367,114 |   |    |   | 403,114 |    |   |   | 95,671   |   |   |   | 34,080  |   |   |   | 899,979 |   |
| Percentage of total                                |   |                   | 40.8    | %      |    |   | 44.8    | %       |   |   | 10.6     | %      |   |   | 3.8     | % |   |   | 100.0 | % |
|                                               |   |                   |    |   |    |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Deposits                                           |   |                   |    |   |    |   |    |    |   |   |     |   |   |   |    |   |   |   |   |   |
| Noninterest-bearing demand                         |   | $                      | 71,983  |   |    | $      | 18,579  |    |   | $      | 3,517    |   |   | $      | 14,894  |   |   | $ | 108,973 |   |
| Interest-bearing demand and savings                |   |                   | 194,395 |   |    |   | 25,803  |    |   |   | 24,496   |   |   |   | 765     |   |   |   | 245,459 |   |
| Retail time less than $100,000                     |   |                   | 180,185 |   |    |   | 46,699  |    |   |   | 93,479   |   |   |   | 471     |   |   |   | 320,834 |   |
| Retail time greater than or equal to $100,000      |   |                   | 121,188 |   |    |   | 27,730  |    |   |   | 42,724   |   |   |   | 210     |   |   |   | 191,852 |   |
| Retail time placed in CDARs program                |   |                   | 30,678  |   |    |   | 3,694   |    |   |   | -        |   |   |   | 818     |   |   |   | 35,190 |   |
| Brokered                                           |   |                   | -       |   |    |   | -       |    |   |   | -        |   |   |   | 134,074 |   |   |   | 134,074 |   |
| Total deposits                                     |   | $                      | 598,429 |   |    | $      | 122,505 |    |   | $      | 164,216  |   |   | $      | 151,232 |   |   | $ | 1,036,382 |   |
| Percentage of total                                |   |                   | 57.7    | %      |    |   | 11.8    | %       |   |   | 15.9     | %      |   |   | 14.6    | % |   |   | 100.0 | % |

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| For the Quarter Ended            |   | Jun-09                    |   |   | Mar-09 |   |   | Dec-08 |   |   | Sep-08 |   |   | June-08 |   |   | Jun-07 |   |   | Jun-06 |   |
|----------------------------------|--------|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
|                             |   | (Number of Months Supply) |   |
| Housing Inventory:               |   |                      |   |
| Henry County                     |   |                      | 11.9   |   |   |   | 12.7   |   |   |   | 14.0   |   |   |    | 13.8   |   |   |   | 13.1   |   |   |   | 10.1 |   |   |   | 8.4 |   |
| Clayton County                   |   |                      | 18.5   |   |   |   | 16.7   |   |   |   | 15.1   |   |   |    | 11.5   |   |   |   | 9.9    |   |   |   | 13.1 |   |   |   | 10.2 |   |
| Newton County                    |   |                      | 10.4   |   |   |   | 12.9   |   |   |   | 14.5   |   |   |    | 15.3   |   |   |   | 13.9   |   |   |   | 8.6 |   |   |   | 9.0 |   |
| South Fulton County              |   |                      | 8.7    |   |   |   | 9.7    |   |   |   | 9.5    |   |   |    | 9.3    |   |   |   | 9.2    |   |   |   | 8.4 |   |   |   | 8.4 |   |
|                             |   |                      |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Vacant Developed Lots Inventory: |   |                      |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Henry County                     |   |                      | 362.9  |   |   |   | 348.8  |   |   |   | 291.0  |   |   |    | 207.0  |   |   |   | 153.0  |   |   |   | 46.0 |   |   |   | 27.0 |   |
| Clayton County                   |   |                      | 436.8  |   |   |   | 273.9  |   |   |   | 169.0  |   |   |    | 122.0  |   |   |   | 91.0   |   |   |   | 30.0 |   |   |   | 25.0 |   |
| Newton County                    |   |                      | 410.3  |   |   |   | 399.9  |   |   |   | 326.0  |   |   |    | 210.0  |   |   |   | 142.0  |   |   |   | 36.0 |   |   |   | 22.0 |   |
| South Fulton County              |   |                      | 192.7  |   |   |   | 161.7  |   |   |   | 126.0  |   |   |    | 96.0   |   |   |   | 83.0   |   |   |   | 35.0 |   |   |   | 19.0 |   |

| As of Quarter End                                  |   | Jun-09                 |    |   | Mar-09 |   |    | Dec-08 |   |   | Sep-08  |   |   | Jun-08 |    |
|----------------------------------------------------|--------|------------------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
|                                               |   | (Dollars in Thousands) |    |
| Commercial and financial                           |   | $                      | 84,599  |   |   | $      | 82,534  |   |   | $      | 87,530  |   |   | $      | 91,401  |   |   | $ | 82,087 |   |
| Agricultural (including loans secured by farmland) |   |                   | 45,774  |   |   |   | 44,671  |   |   |   | 48,647  |   |   |   | 49,227  |   |   |   | 46,891 |   |
| Real estate - construction                         |   |                   | 290,949 |   |   |   | 314,863 |   |   |   | 315,786 |   |   |   | 332,901 |   |   |   | 344,393 |   |
| Real estate - commercial                           |   |                   | 285,731 |   |   |   | 274,338 |   |   |   | 276,645 |   |   |   | 281,781 |   |   |   | 275,962 |   |
| Real estate - residential                          |   |                   | 183,074 |   |   |   | 191,388 |   |   |   | 196,306 |   |   |   | 195,439 |   |   |   | 181,169 |   |
| Installment loans to individuals and other loans   |   |                   | 29,790  |   |   |   | 32,740  |   |   |   | 32,084  |   |   |   | 32,075  |   |   |   | 33,237 |   |
|                                               |   |                   | 919,917 |   |   |   | 940,534 |   |   |   | 956,998 |   |   |   | 982,824 |   |   |   | 963,739 |   |
|                                               |   |                   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Deferred loan fees and unearned interest, net      |   |                   | (219    | )      |   |   | (255    | )      |   |   | (310    | )      |   |   | (253    | ) |   |   | (239 | ) |
|                                               |   |                   | 919,698 |   |   |   | 940,279 |   |   |   | 956,688 |   |   |   | 982,571 |   |   |   | 963,500 |   |
| Allowance for loan losses                          |   |                   | (19,719 | )      |   |   | (20,403 | )      |   |   | (19,374 | )      |   |   | (20,240 | ) |   |   | (14,303 | ) |
|                                               |   | $                      | 899,979 |   |   | $      | 919,876 |   |   | $      | 937,314 |   |   | $      | 962,331 |   |   | $ | 949,197 |   |

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Table of Contents

| As of Quarter End                                  |   | Jun-09 |   |   | Mar-09 |   |   | Dec-08 |   |   | Sep-08 |   |   | Jun-08 |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Commercial and financial                           |   |   | 9.20   | %      |   |   | 8.78   | %      |   |   | 9.15   | %      |   |   | 9.30   | % |   |   | 8.52 | % |
| Agricultural (including loans secured by farmland) |   |   | 4.98   | %      |   |   | 4.75   | %      |   |   | 5.08   | %      |   |   | 5.01   | % |   |   | 4.87 | % |
| Real estate - construction                         |   |   | 31.63  | %      |   |   | 33.49  | %      |   |   | 33.01  | %      |   |   | 33.88  | % |   |   | 35.74 | % |
| Real estate - commercial                           |   |   | 31.07  | %      |   |   | 29.18  | %      |   |   | 28.92  | %      |   |   | 28.68  | % |   |   | 28.64 | % |
| Real estate - residential                          |   |   | 19.90  | %      |   |   | 20.35  | %      |   |   | 20.52  | %      |   |   | 19.89  | % |   |   | 18.80 | % |
| Installment loans to individuals and other loans   |   |   | 3.24   | %      |   |   | 3.48   | %      |   |   | 3.35   | %      |   |   | 3.27   | % |   |   | 3.45 | % |
|                                               |   |   | 100.02 | %      |   |   | 100.03 | %      |   |   | 100.03 | %      |   |   | 100.03 | % |   |   | 100.02 | % |
| Deferred loan fees and unearned interest, net      |   |   | -0.02  | %      |   |   | -0.03  | %      |   |   | -0.03  | %      |   |   | -0.03  | % |   |   | -0.02 | % |
| Total loans                                        |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | % |   |   | 100.00 | % |
| Allowance for loan losses                          |   |   | -2.14  | %      |   |   | -2.17  | %      |   |   | -2.03  | %      |   |   | -2.06  | % |   |   | -1.48 | % |
| Net loans                                          |   |   | 97.86  | %      |   |   | 97.83  | %      |   |   | 97.97  | %      |   |   | 97.94  | % |   |   | 98.52 | % |

|                                     |   | June 30, 2009          |    |   | December 31, 2008 |   |   | June 30, 2008 |   |
|------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|--------|---------------|--------|
|                                     |   | $ Amount               |    |   | % to Total        |   |   | $ Amount      |   |   | % to Total |   |   | $ Amount |   |   | % to Total |   |
|                                     |   | (Dollars in Thousands) |    |
| Construction and development:            |   |                   |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Acquisition and development:             |   |                   |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| 1-4 family residential                   |   | $                      | 119,476 |   |              |   | 41.1   | %             |   | $ | 129,412 |   |   |   | 41.0 | % |   | $ | 132,885 |   |   |   | 38.6 | % |
| Commercial and multi-family              |   |                   | 95,245  |   |              |   | 32.7   | %             |   |   | 95,934 |   |   |   | 30.4 | % |   |   | 103,772 |   |   |   | 30.1 | % |
| Construction:                            |   |                   |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1-4 family residential spec              |   |                   | 12,547  |   |              |   | 4.3    | %             |   |   | 19,182 |   |   |   | 6.1 | % |   |   | 32,985 |   |   |   | 9.6 | % |
| 1-4 family residential pre-sold          |   |                   | 162     |   |              |   | 0.1    | %             |   |   | 112 |   |   |   | 0.1 | % |   |   | 965 |   |   |   | 0.3 | % |
| 1-4 family residential other             |   |                   | 20,701  |   |              |   | 7.1    | %             |   |   | 23,423 |   |   |   | 7.4 | % |   |   | 29,165 |   |   |   | 8.5 | % |
| Commercial owner-occupied                |   |                   | 2,007   |   |              |   | 0.7    | %             |   |   | 3,340 |   |   |   | 1.0 | % |   |   | 5,123 |   |   |   | 1.5 | % |
| Commercial not owner-occupied            |   |                   | 28,938  |   |              |   | 9.9    | %             |   |   | 27,038 |   |   |   | 8.5 | % |   |   | 25,233 |   |   |   | 7.3 | % |
| Hotel/motel                              |   |                   | 4,080   |   |              |   | 1.4    | %             |   |   | 7,949 |   |   |   | 2.5 | % |   |   | 496 |   |   |   | 0.1 | % |
| Multi-family properties                  |   |                   | 5,066   |   |              |   | 1.7    | %             |   |   | - |   |   |   | 0.0 | % |   |   | 12,540 |   |   |   | 3.6 | % |
| Special purpose property                 |   |                   | 2,288   |   |              |   | 0.8    | %             |   |   | 6,538 |   |   |   | 2.1 | % |   |   | 1,229 |   |   |   | 0.4 | % |
| Other                                    |   |                   | 439     |   |              |   | 0.2    | %             |   |   | 2,858 |   |   |   | 0.9 | % |   |   | - |   |   |   | 0.0 | % |
| Total construction and development loans |   | $                      | 290,949 |   |              |   | 100.0  | %             |   | $ | 315,786 |   |   |   | 100.0 | % |   | $ | 344,393 |   |   |   | 100.0 | % |
| Percentage of total loans                |   |                   | 31.6    | %      |              |   |   |          |   |   | 33.0 | % |   |   |   |   |   |   | 35.7 | % |   |   |   |   |

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Table of Contents

|                               |   | June 30, 2009 |    |   | December 31, 2008 |   |   | June 30, 2008 |   |
|------------------------------------|--------|---------------|---------|--------|-------------------|--------|--------|---------------|--------|
|                               |   | $ Amount      |    |   | % to Total        |   |   | $ Amount      |   |   | % to Total |   |   | $ Amount |   |   | % to Total |   |
| Commercial real estate:            |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Owner-occupied:                    |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Office                             |   | $             | 41,945  |   |              |   | 14.7   | %             |   | $ | 41,617 |   |   |   | 15.0 | % |   | $ | 37,100 |   |   |   | 13.4 | % |
| Retail                             |   |          | 19,993  |   |              |   | 7.0    | %             |   |   | 21,062 |   |   |   | 7.6 | % |   |   | 22,775 |   |   |   | 8.3 | % |
| Other                              |   |          | 41,260  |   |              |   | 14.4   | %             |   |   | 40,413 |   |   |   | 14.6 | % |   |   | 36,988 |   |   |   | 13.4 | % |
| Not owner-occupied:                |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Office                             |   |          | 20,892  |   |              |   | 7.3    | %             |   |   | 25,425 |   |   |   | 9.2 | % |   |   | 27,634 |   |   |   | 10.0 | % |
| Retail                             |   |          | 44,896  |   |              |   | 15.7   | %             |   |   | 36,085 |   |   |   | 13.1 | % |   |   | 34,629 |   |   |   | 12.5 | % |
| Other                              |   |          | 24,937  |   |              |   | 8.7    | %             |   |   | 24,656 |   |   |   | 8.9 | % |   |   | 26,883 |   |   |   | 9.7 | % |
| Other:                             |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel/motel                        |   |          | 21,887  |   |              |   | 7.7    | %             |   |   | 15,812 |   |   |   | 5.7 | % |   |   | 21,197 |   |   |   | 7.7 | % |
| Industrial                         |   |          | 4,502   |   |              |   | 1.6    | %             |   |   | 4,677 |   |   |   | 1.7 | % |   |   | 4,716 |   |   |   | 1.7 | % |
| Multi-family properties            |   |          | 23,043  |   |              |   | 8.1    | %             |   |   | 22,685 |   |   |   | 8.2 | % |   |   | 26,655 |   |   |   | 9.7 | % |
| Special purpose property           |   |          | 41,430  |   |              |   | 14.5   | %             |   |   | 39,240 |   |   |   | 14.2 | % |   |   | 35,572 |   |   |   | 12.9 | % |
| Other                              |   |          | 946     |   |              |   | 0.3    | %             |   |   | 4,973 |   |   |   | 1.8 | % |   |   | 1,813 |   |   |   | 0.7 | % |
| Total commercial real estate loans |   | $             | 285,731 |   |              |   | 100.0  | %             |   | $ | 276,645 |   |   |   | 100.0 | % |   | $ | 275,962 |   |   |   | 100.0 | % |
| Percentage of total loans          |   |          | 31.1    | %      |              |   |   |          |   |   | 28.9 | % |   |   |   |   |   |   | 28.6 | % |   |   |   |   |

| As of Quarter End                             |   | Jun-09                 |      |   | Mar-09 |   |      | Dec-08 |   |   | Sep-08    |   |   | Jun-08 |      |
|-----------------------------------------------|--------|------------------------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
|                                          |   | (Dollars In Thousands) |      |
| Noninterest-bearing demand                    |   | $                      | 108,973   |   |   | $      | 111,472   |   |   | $      | 91,114    |   |   | $      | 101,417   |   |   | $ | 102,909 |   |
| Interest-bearing demand and savings           |   |                   | 245,459   |   |   |   | 250,325   |   |   |   | 252,122   |   |   |   | 262,723   |   |   |   | 336,359 |   |
| Retail time less than $100,000                |   |                   | 320,834   |   |   |   | 330,854   |   |   |   | 328,329   |   |   |   | 323,377   |   |   |   | 292,981 |   |
| Retail time greater than or equal to $100,000 |   |                   | 191,852   |   |   |   | 198,768   |   |   |   | 198,845   |   |   |   | 182,491   |   |   |   | 175,914 |   |
| Retail time placed in CDARs programs          |   |                   | 35,190    |   |   |   | 53,712    |   |   |   | 46,690    |   |   |   | 18,343    |   |   |   | - |   |
| Brokered                                      |   |                   | 134,074   |   |   |   | 160,167   |   |   |   | 206,603   |   |   |   | 141,493   |   |   |   | 88,432 |   |
| Total deposits                                |   | $                      | 1,036,382 |   |   | $      | 1,105,298 |   |   | $      | 1,123,703 |   |   | $      | 1,029,844 |   |   | $ | 996,595 |   |

| As of Quarter End                             |   | Jun-09 |   |   | Mar-09 |   |   | Dec-08 |   |   | Sep-08 |   |   | Jun-08 |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Noninterest-bearing demand                    |   |   | 10.51  | %      |   |   | 10.09  | %      |   |   | 8.11   | %      |   |   | 9.85   | % |   |   | 10.33 | % |
| Interest-bearing demand and savings           |   |   | 23.68  | %      |   |   | 22.65  | %      |   |   | 22.44  | %      |   |   | 25.51  | % |   |   | 33.75 | % |
| Retail time less than $100,000                |   |   | 30.96  | %      |   |   | 29.93  | %      |   |   | 29.22  | %      |   |   | 31.40  | % |   |   | 29.40 | % |
| Retail time greater than or equal to $100,000 |   |   | 18.51  | %      |   |   | 17.98  | %      |   |   | 17.69  | %      |   |   | 17.72  | % |   |   | 17.65 | % |
| Retail time placed in CDARs program           |   |   | 3.40   | %      |   |   | 4.86   | %      |   |   | 4.15   | %      |   |   | 1.78   | % |   |   | - |   |
| Brokered                                      |   |   | 12.94  | %      |   |   | 14.49  | %      |   |   | 18.39  | %      |   |   | 13.74  | % |   |   | 8.87 | % |
| Total deposits                                |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | %      |   |   | 100.00 | % |   |   | 100.00 | % |

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Table of Contents

| For the Three Months Ended June 30, |   |                   |      |   | 2009     |   |   |    |   |   |    |   |   | 2008     |      |   |    |   |
|-------------------------------------|--------|------------------------|-----------|--------|----------|--------|--------|---------|--------|--------|---------|--------|--------|----------|-----------|--------|---------|--------|
|                                |   |                   |      |   | Interest |   |   | Average |   |   |    |   |   | Interest |      |   | Average |   |
|                                |   | Average                |      |   | Income/  |   |   | Yield/  |   |   | Average |   |   | Income/  |      |   | Yield/  |   |
|                                |   | Balance                |      |   | Expense  |   |   | Rate    |   |   | Balance |   |   | Expense  |      |   | Rate    |   |
|                                |   | (Dollars In Thousands) |      |
| Interest-earning assets:            |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |
| Loans                               |   | $                      | 930,131   |   |     | $      | 14,029 |    |   |   | 6.05    | %      |   | $        | 943,391   |   |    | $      | 15,140 |   |   |   | 6.45 | % |
| Investment securities:              |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Taxable                             |   |                   | 156,453   |   |     |   | 1,835  |    |   |   | 4.70    | %      |   |     | 143,982   |   |    |   | 1,902 |   |   |   | 5.31 | % |
| Nontaxable                          |   |                   | 15,245    |   |     |   | 236    |    |   |   | 6.22    | %      |   |     | 33,882    |   |    |   | 516 |   |   |   | 6.13 | % |
| Other short-term investments        |   |                   | 119,556   |   |     |   | 73     |    |   |   | 0.24    | %      |   |     | 15,845    |   |    |   | 83 |   |   |   | 2.10 | % |
| Total interest-earning assets       |   | $                      | 1,221,385 |   |     | $      | 16,173 |    |   |   | 5.31    | %      |   | $        | 1,137,100 |   |    | $      | 17,641 |   |   |   | 6.24 | % |
| Interest-bearing liabilities:       |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Demand deposits                     |   | $                      | 215,201   |   |     | $      | 294    |    |   |   | 0.55    | %      |   | $        | 292,848   |   |    | $      | 1,339 |   |   |   | 1.84 | % |
| Savings deposits                    |   |                   | 36,467    |   |     |   | 23     |    |   |   | 0.25    | %      |   |     | 36,168    |   |    |   | 53 |   |   |   | 0.59 | % |
| Time deposits                       |   |                   | 706,348   |   |     |   | 6,409  |    |   |   | 3.64    | %      |   |     | 556,630   |   |    |   | 6,070 |   |   |   | 4.39 | % |
| FHLB advances                       |   |                   | 105,532   |   |     |   | 1,074  |    |   |   | 4.08    | %      |   |     | 97,511    |   |    |   | 928 |   |   |   | 3.83 | % |
| Notes payable                       |   |                   | 30,310    |   |     |   | 270    |    |   |   | 3.58    | %      |   |     | 10,310    |   |    |   | 113 |   |   |   | 4.40 | % |
| Other short-term borrowings         |   |                   | 8,889     |   |     |   | 34     |    |   |   | 1.53    | %      |   |     | 14,205    |   |    |   | 95 |   |   |   | 2.69 | % |
| Total interest-bearing liabilities  |   | $                      | 1,102,747 |   |     | $      | 8,104  |    |   |   | 2.95    | %      |   | $        | 1,007,672 |   |    | $      | 8,598 |   |   |   | 3.43 | % |
|                                |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Interest rate spread                |   |                   |      |   |     |   |   |    |   |   | 2.36    | %      |   |     |      |   |    |   |   |   |   |   | 2.81 | % |
| Net interest income                 |   |                   |      |   |     | $      | 8,069  |    |   |   |    |   |   |     |      |   |    | $      | 9,043 |   |   |   |   |   |
| Net interest margin                 |   |                   |      |   |     |   |   |    |   |   | 2.65    | %      |   |     |      |   |    |   |   |   |   |   | 3.20 | % |

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| For the Six Months Ended June 30,  |   |                   |      |   | 2009     |   |   |    |   |   |    |   |   | 2008     |      |   |    |   |
|------------------------------------|--------|------------------------|-----------|--------|----------|--------|--------|---------|--------|--------|---------|--------|--------|----------|-----------|--------|---------|--------|
|                               |   |                   |      |   | Interest |   |   | Average |   |   |    |   |   | Interest |      |   | Average |   |
|                               |   | Average                |      |   | Income/  |   |   | Yield/  |   |   | Average |   |   | Income/  |      |   | Yield/  |   |
|                               |   | Balance                |      |   | Expense  |   |   | Rate    |   |   | Balance |   |   | Expense  |      |   | Rate    |   |
|                               |   | (Dollars In Thousands) |      |
| Interest-earning assets:           |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |
| Loans                              |   | $                      | 938,534   |   |     | $      | 27,979 |    |   |   | 6.01    | %      |   | $        | 936,720   |   |    | $      | 31,797 |   |   |   | 6.83 | % |
| Investment securities:             |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Taxable                            |   |                   | 153,156   |   |     |   | 3,726  |    |   |   | 4.91    | %      |   |     | 147,577   |   |    |   | 3,895 |   |   |   | 5.31 | % |
| Nontaxable                         |   |                   | 19,279    |   |     |   | 590    |    |   |   | 6.18    | %      |   |     | 33,513    |   |    |   | 1,020 |   |   |   | 6.12 | % |
| Other short-term investments       |   |                   | 132,754   |   |     |   | 153    |    |   |   | 0.23    | %      |   |     | 11,471    |   |    |   | 136 |   |   |   | 2.38 | % |
| Total interest-earning assets      |   | $                      | 1,243,723 |   |     | $      | 32,448 |    |   |   | 5.26    | %      |   | $        | 1,129,281 |   |    | $      | 36,848 |   |   |   | 6.56 | % |
| Interest-bearing liabilities:      |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Demand deposits                    |   | $                      | 214,837   |   |     | $      | 585    |    |   |   | 0.55    | %      |   | $        | 299,377   |   |    | $      | 3,265 |   |   |   | 2.19 | % |
| Savings deposits                   |   |                   | 35,340    |   |     |   | 44     |    |   |   | 0.25    | %      |   |     | 35,755    |   |    |   | 129 |   |   |   | 0.72 | % |
| Time deposits                      |   |                   | 737,995   |   |     |   | 13,758 |    |   |   | 3.76    | %      |   |     | 545,096   |   |    |   | 12,485 |   |   |   | 4.61 | % |
| FHLB advances                      |   |                   | 107,110   |   |     |   | 2,152  |    |   |   | 4.05    | %      |   |     | 94,983    |   |    |   | 1,859 |   |   |   | 3.93 | % |
| Notes payable                      |   |                   | 25,780    |   |     |   | 453    |    |   |   | 3.55    | %      |   |     | 10,310    |   |    |   | 281 |   |   |   | 5.48 | % |
| Other short-term borrowings        |   |                   | 8,910     |   |     |   | 71     |    |   |   | 1.61    | %      |   |     | 16,311    |   |    |   | 264 |   |   |   | 3.26 | % |
| Total interest-bearing liabilities |   | $                      | 1,129,972 |   |     | $      | 17,063 |    |   |   | 3.05    | %      |   | $        | 1,001,832 |   |    | $      | 18,283 |   |   |   | 3.67 | % |
|                               |   |                   |      |   |     |   |   |    |   |   |    |   |   |     |      |   |    |   |   |   |   |   |   |   |
| Interest rate spread               |   |                   |      |   |     |   |   |    |   |   | 2.21    | %      |   |     |      |   |    |   |   |   |   |   | 2.89 | % |
| Net interest income                |   |                   |      |   |     | $      | 15,385 |    |   |   |    |   |   |     |      |   |    | $      | 18,565 |   |   |   |   |   |
| Net interest margin                |   |                   |      |   |     |   |   |    |   |   | 2.49    | %      |   |     |      |   |    |   |   |   |   |   | 3.31 | % |

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|   | · | lending policies and procedures, including changes in underwriting standards and collection, charge-off and recovery practices; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes in international, national, regional and local economic and business conditions that affect the collectibility of the portfolio; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes in the nature and volume of the loan portfolio; |
|--------|--------|---------------------------------------------------------|

|   | · | experience, ability, and depth of lending management and other relevant staff; |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | levels of and trends in delinquencies and impaired loans; |
|--------|--------|-----------------------------------------------------------|

|   | · | changes in the quality of our loan review system; |
|--------|--------|---------------------------------------------------|

|   | · | value of underlying collateral for collateral-dependent loans; |
|--------|--------|----------------------------------------------------------------|

|   | · | existence and effect of any concentrations of credit, and changes in the level of such concentrations; and |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | other external factors such as competition and legal and regulatory requirements. |
|--------|--------|-----------------------------------------------------------------------------------|

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| As of                                              |   | June 30, 2009 |   |   | December 31, 2008                              |   |
|----------------------------------------------------|--------|---------------|--------|--------|------------------------------------------------|--------|
|                                               |   | Amount        |   |   | Percentage of Loans in Category to Total Loans |   |   | Amount |   |   | Percentage of Loans in Category to Total Loans |   |
| Commercial and financial                           |   | $             | 1,456  |   |                                           |   | 9.2 | % |   | $ | 1,382 |   |   |   | 9.1 | % |
|                                               |   |          |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Agricultural (including loans secured by farmland) |   |          | 101    |   |                                           |   | 5.0 | % |   |   | 112 |   |   |   | 5.1 | % |
|                                               |   |          |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – construction                   |   |          | 11,407 |   |                                           |   | 31.6 | % |   |   | 11,950 |   |   |   | 33.0 | % |
|                                               |   |          |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – commercial                     |   |          | 3,003  |   |                                           |   | 31.1 | % |   |   | 2,552 |   |   |   | 28.9 | % |
|                                               |   |          |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Real estate – residential                    |   |          | 2,779  |   |                                           |   | 19.9 | % |   |   | 2,417 |   |   |   | 20.5 | % |
|                                               |   |          |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Consumer and other loans                           |   |          | 148    |   |                                           |   | 3.2 | % |   |   | 176 |   |   |   | 3.4 | % |
|                                               |   |          |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Unallocated                                        |   |          | 825    |   |                                           |   | N/A |   |   |   | 785 |   |   |   | N/A |   |
|                                               |   |          |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $             | 19,719 |   |                                           |   | 100.0 | % |   | $ | 19,374 |   |   |   | 100.0 | % |

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|                                                                                               |   | Six months endedJune 30,2009 |    |   | Year endedDecember 31,2008 |   |
|----------------------------------------------------------------------------------------------------|--------|------------------------------|---------|--------|----------------------------|--------|
|                                                                                               |   |                         |    |   |                       |   |
| Balance at beginning of year                                                                       |   | $                            | 19,373  |   |                       | $      | 12,906 |   |
| Charge-offs:                                                                                       |   |                         |    |   |                       |   |   |   |
| Commercial and financial                                                                           |   |                         | 522     |   |                       |   | 709 |   |
| Agricultural (including loans secured by farmland)                                                 |   |                         | -       |   |                       |   | - |   |
| Real estate – construction and development                                                   |   |                         | 2,317   |   |                       |   | 8,023 |   |
| Real estate – commercial                                                                     |   |                         | 93      |   |                       |   | 25 |   |
| Real estate – residential                                                                    |   |                         | 518     |   |                       |   | 3,188 |   |
| Installment loans to individuals and other loans                                                   |   |                         | 163     |   |                       |   | 183 |   |
|                                                                                               |   |                         | 3,613   |   |                       |   | 12,128 |   |
| Recoveries:                                                                                        |   |                         |    |   |                       |   |   |   |
| Commercial and financial                                                                           |   |                         | 90      |   |                       |   | 38 |   |
| Agricultural (including loans secured by farmland)                                                 |   |                         | 38      |   |                       |   | 38 |   |
| Real estate – construction and development                                                   |   |                         | 4       |   |                       |   | 2 |   |
| Real estate – commercial                                                                     |   |                         | 11      |   |                       |   | 340 |   |
| Real estate – residential                                                                    |   |                         | 21      |   |                       |   | 33 |   |
| Installment loans to individuals and other loans                                                   |   |                         | 45      |   |                       |   | 94 |   |
|                                                                                               |   |                         | 209     |   |                       |   | 545 |   |
| Net charge-offs (recoveries)                                                                       |   |                         | 3,405   |   |                       |   | 11,583 |   |
| Additions provided to the allowance charged to operations                                          |   |                         | 3,750   |   |                       |   | 18,050 |   |
| Balance at end of year                                                                             |   | $                            | 19,719  |   |                       | $      | 19,373 |   |
|                                                                                               |   |                         |    |   |                       |   |   |   |
| Average balance of loans outstanding                                                               |   | $                            | 938,534 |   |                       | $      | 955,253 |   |
|                                                                                               |   |                         |    |   |                       |   |   |   |
| Ratio of net charge-offs (recoveries) during the year to average loans outstanding during the year |   |                         | 0.73    | %      |                       |   | 1.21 | % |

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| Category                     | Net Carrying Value * | Collateral Description                            | Average CarryingValue/ Unit                                  |
|------------------------------|----------------------|---------------------------------------------------|--------------------------------------------------------------|
|                         |                 |                                              |                                                         |
| Construction and Development | $11.1 million        | 11 parcels of undeveloped land totaling 491 acres | $14,500 per residential acre and$127,000 per commercial acre |
| Construction and Development | $8.4 million         | 258 residential lots                              | $32,700 per lot                                              |
| 1-4 Family Residential       | $6.2 million         | 75 houses                                         | $82,000 per house                                            |
| Commercial Real Estate       | $25.4 million        | 16 commercial properties                          | $1.59 million per property                                   |
| Agriculture                  | $1.5 million         | 2 parcels of farm land totaling 291 acres         | $5,300 per acre                                              |
| Commercial and Industrial    | $2.9 million         | Non-real estate collateral                        | $1.45 million per loan                                       |
| Multi-Family Residential     | $8.1 million         | 9 condominium units                               | $897,000 per unit                                            |
| Consumer                     | $72,000              | Non-real estate collateral                        | $6,500 per loan                                              |

| As of Quarter End                                                                                    |   | Jun-09                 |   |   | Mar-09 |   |   | Dec-08 |   |   | Sep-08 |   |   | Jun-08 |   |
|------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                 |   | (Dollars In Thousands) |   |
| Loans accounted for on a nonaccrual basis                                                            |   | $                      | 70,232 |   |   | $      | 62,653 |   |   | $      | 54,903 |   |   | $      | 43,471 |   |   | $ | 40,464 |   |
| Accruing loans which are contractually past due 90 days or more as to principal or interest payments |   |                   | 190    |   |   |   | 19     |   |   |   | 206    |   |   |   | 4      |   |   |   | 332 |   |
| Troubled debt restructurings not included above                                                      |   |                   | 84     |   |   |   | 311    |   |   |   | 311    |   |   |   | 9,808  |   |   |   | 9,808 |   |
| Total nonperforming loans                                                                            |   | $                      | 70,506 |   |   | $      | 62,983 |   |   | $      | 55,420 |   |   | $      | 53,283 |   |   | $ | 50,604 |   |
|                                                                                                 |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of  nonperforming loans to total loans                                               |   |                   | 7.67   | %      |   |   | 6.70   | %      |   |   | 5.79   | %      |   |   | 5.42   | % |   |   | 5.25 | % |
|                                                                                                 |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserves allocated to nonperforming loans:                                                           |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Specific Reserves (FAS 114)                                                                          |   | $                      | 5,965  |   |   | $      | 6,179  |   |   | $      | 2,888  |   |   | $      | 9,905  |   |   | $ | 6,222 |   |
| General Reserves (FAS 5)                                                                             |   |                   | 697    |   |   |   | 788    |   |   |   | 1,188  |   |   |   | 1,136  |   |   |   | 390 |   |
| Total reserves allocated to nonperforming loans                                                      |   | $                      | 6,662  |   |   | $      | 6,967  |   |   | $      | 4,076  |   |   | $      | 11,041 |   |   | $ | 6,612 |   |
|                                                                                                 |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total reserves allocated as a percentage of nonperforming loans                                      |   |                   | 9.45   | %      |   |   | 11.06  | %      |   |   | 7.35   | %      |   |   | 20.72  | % |   |   | 13.07 | % |

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|                                                                                                 |   | South Georgia          |   |   | North Georgia |   |   | Florida |   |   | Treasury |   |   | Total  |   |
|------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------|--------|--------|---------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                                 |   | (Dollars In Thousands) |   |
| Loans accounted for on a nonaccrual basis                                                            |   | $                      | 6,674  |   |          | $      | 41,446 |    |   | $      | 22,112   |   |   | $      | -      |   |   | $ | 70,232 |   |
| Accruing loans which are contractually past due 90 days or more as to principal or interest payments |   |                   | 180    |   |          |   | -      |    |   |   | -        |   |   |   | 10     |   |   |   | 190 |   |
| Troubled debt restructurings not included above                                                      |   |                   | -      |   |          |   | 84     |    |   |   | -        |   |   |   | -      |   |   |   | 84 |   |
| Total nonperforming loans                                                                            |   | $                      | 6,854  |   |          | $      | 41,530 |    |   | $      | 22,112   |   |   | $      | 10     |   |   | $ | 70,506 |   |
| Foreclosed assets                                                                                    |   |                   | 2,032  |   |          |   | 34,724 |    |   |   | 660      |   |   |   | -      |   |   |   | 37,416 |   |
| Total nonperforming assets                                                                           |   | $                      | 8,886  |   |          | $      | 76,254 |    |   | $      | 22,772   |   |   | $      | 10     |   |   | $ | 107,922 |   |
| Ratio of nonperforming loans to total loans in market                                                |   |                   | 1.84   | %      |          |   | 10.03  | %       |   |   | 22.36    | %      |   |   | 0.03   | % |   |   | 7.67 | % |
| Ratio of nonperforming assets to total assets in market                                              |   |                   | 2.29   | %      |          |   | 17.17  | %       |   |   | 22.24    | %      |   |   | 0.00   | % |   |   | 8.45 | % |

| Category                     | Book Value    | Description                                      | Average Value/ Unit                                    |
|------------------------------|---------------|--------------------------------------------------|--------------------------------------------------------|
| Construction and Development | $6.6 million  | 9 parcels of undeveloped land totaling 670 acres | $8,700 per residential acre$66,300 per commercial acre |
| Construction and Development | $13.1 million | 568 residential lots                             | $23,000 per lot                                        |
| 1-4 Family Residential       | $12.0 million | 67 houses                                        | $180,000 per house                                     |
| Commercial Real Estate       | $5.7 million  | 21 commercial properties                         | $271,000 per property                                  |

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|                                                              |   | Three Months EndedJune 30, |   |   |   |   |   | Six Months EndedJune 30, |   |   |   |   |
|-------------------------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|--------|--------------------------|--------|--------|--------|--------|
|                                                              |   | 2009                       |   |   | 2008   |   |   | Pct. Chg.                |   |   | 2009   |   |   | 2008 |   |   | Pct. Chg. |   |
|                                                              |   | (Dollars in Thousands)     |   |
| Noninterest income:                                               |   |                       |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                               |   | $                          | 866    |   |   | $      | 978    |                     |   |   | -11.5  | %      |   | $ | 1,682 |   |   | $ | 1,883 |   |   |   | -10.7 | % |
| Mortgage origination fees                                         |   |                       | 268    |   |   |   | 216    |                     |   |   | 24.1   | %      |   |   | 465 |   |   |   | 422 |   |   |   | 10.2 | % |
| ATM/debit card fee income                                         |   |                       | 218    |   |   |   | 174    |                     |   |   | 25.3   | %      |   |   | 408 |   |   |   | 349 |   |   |   | 16.9 | % |
| Securities transactions, net                                      |   |                       | 756    |   |   |   | 17     |                     |   |   | 4347.1 | %      |   |   | 772 |   |   |   | 200 |   |   |   | 286.0 | % |
| Earnings on bank-owned life insurance                             |   |                       | 177    |   |   |   | 105    |                     |   |   | 68.6   | %      |   |   | 281 |   |   |   | 210 |   |   |   | 33.8 | % |
| Gain (loss) on disposal of assets                                 |   |                       | (394   | )      |   |   | (42    | )                        |   |   | -838.1 | %      |   |   | (522 | ) |   |   | (108 | ) |   |   | -383.3 | % |
| Gain (loss) on derivative instrument                              |   |                       | 387    |   |   |   | -      |                     |   |   | 100.0  | %      |   |   | 1,169 |   |   |   | - |   |   |   | 100.0 | % |
| Other noninterest income                                          |   |                       | 209    |   |   |   | 124    |                     |   |   | 68.5   | %      |   |   | 337 |   |   |   | 259 |   |   |   | 30.1 | % |
| Total noninterest income                                          |   | $                          | 2,487  |   |   | $      | 1,572  |                     |   |   | 58.2   | %      |   | $ | 4,592 |   |   | $ | 3,215 |   |   |   | 42.8 | % |
| Noninterest income (annualized) as a percentage of average assets |   |                       | 0.76   | %      |   |   | 0.52   | %                        |   |   |   |   |   |   | 0.69 | % |   |   | 0.54 | % |   |   |   |   |

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|                                                               |   | Three Months EndedJune 30, |   |   |   |   |   | Six Months EndedJune 30, |   |   |   |   |
|--------------------------------------------------------------------|--------|----------------------------|--------|--------|--------|--------|--------|--------------------------|--------|--------|--------|--------|
|                                                               |   | 2009                       |   |   | 2008   |   |   | Pct. Chg.                |   |   | 2009   |   |   | 2008 |   |   | Pct. Chg. |   |
|                                                               |   | (Dollars in Thousands)     |   |
| Noninterest expenses:                                              |   |                       |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Salaries and wages                                                 |   | $                          | 3,347  |   |   | $      | 3,921  |                     |   |   | -14.6  | %      |   | $ | 7,478 |   |   | $ | 8,157 |   |   |   | -8.3 | % |
| Deferred loan cost                                                 |   |                       | (399   | )      |   |   | (468   | )                        |   |   | -14.7  | %      |   |   | (770 | ) |   |   | (856 | ) |   |   | -10.0 | % |
| Employee benefits                                                  |   |                       | 1,087  |   |   |   | 1,072  |                     |   |   | 1.4    | %      |   |   | 1,967 |   |   |   | 2,236 |   |   |   | -12.0 | % |
| Net occupancy expense of premises                                  |   |                       | 579    |   |   |   | 648    |                     |   |   | -10.6  | %      |   |   | 1,187 |   |   |   | 1,248 |   |   |   | -4.9 | % |
| Furniture and equipment expense                                    |   |                       | 498    |   |   |   | 522    |                     |   |   | -4.6   | %      |   |   | 1,002 |   |   |   | 1,046 |   |   |   | -4.2 | % |
| Advertising and business development                               |   |                       | 109    |   |   |   | 126    |                     |   |   | -13.5  | %      |   |   | 205 |   |   |   | 308 |   |   |   | -33.4 | % |
| Supplies and printing                                              |   |                       | 85     |   |   |   | 102    |                     |   |   | -16.7  | %      |   |   | 182 |   |   |   | 212 |   |   |   | -14.2 | % |
| Telephone and internet charges                                     |   |                       | 167    |   |   |   | 211    |                     |   |   | -20.9  | %      |   |   | 339 |   |   |   | 413 |   |   |   | -17.9 | % |
| Postage and courier                                                |   |                       | 133    |   |   |   | 140    |                     |   |   | -5.0   | %      |   |   | 268 |   |   |   | 302 |   |   |   | -11.3 | % |
| Legal and accounting fees                                          |   |                       | 226    |   |   |   | 102    |                     |   |   | 121.6  | %      |   |   | 353 |   |   |   | 214 |   |   |   | 65.0 | % |
| Deposit insurance                                                  |   |                       | 903    |   |   |   | 28     |                     |   |   | 3125.0 | %      |   |   | 1,120 |   |   |   | 56 |   |   |   | 1900.0 | % |
| Director fees and expenses                                         |   |                       | 131    |   |   |   | 154    |                     |   |   | -14.9  | %      |   |   | 308 |   |   |   | 328 |   |   |   | -6.1 | % |
| Service charges and fees                                           |   |                       | 124    |   |   |   | 139    |                     |   |   | -10.8  | %      |   |   | 271 |   |   |   | 314 |   |   |   | -13.7 | % |
| Foreclosure and repossession expenses                              |   |                       | 506    |   |   |   | 68     |                     |   |   | 644.1  | %      |   |   | 1,210 |   |   |   | 147 |   |   |   | 723.1 | % |
| Other noninterest expense                                          |   |                       | 606    |   |   |   | 426    |                     |   |   | 42.3   | %      |   |   | 1,107 |   |   |   | 895 |   |   |   | 23.7 | % |
| Total noninterest expense                                          |   | $                          | 8,102  |   |   | $      | 7,191  |                     |   |   | 12.7   | %      |   | $ | 16,227 |   |   | $ | 15,020 |   |   |   | 8.0 | % |
| Noninterest expense as a percentage of average assets (annualized) |   |                       | 2.48   | %      |   |   | 2.39   | %                        |   |   |   |   |   |   | 2.45 | % |   |   | 2.53 | % |   |   |   |   |

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|                                                    |   |                   |    |   | Less than |   |   | 1 to 3 |   |   | 3 to 5 |   |   | More than |   |
|---------------------------------------------------------|--------|------------------------|---------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
| Contractual Obligations                                 |   | Total                  |    |   | 1 year    |   |   | years  |   |   | years  |   |   | 5 years   |   |
|                                                    |   | (Dollars In Thousands) |    |
| Federal Home Loan Bank of Atlanta Advances              |   | $                      | 105,450 |   |      | $      | 35,639 |   |   | $      | 40,730 |   |   | $         | 6,631  |   |   | $ | 22,450 |   |
| Operating Lease Obligations                             |   |                   | 859     |   |      |   | 257    |   |   |   | 410    |   |   |      | 192    |   |   |   | - |   |
| Guaranteed Preferred Beneficial Interests in Debentures |   |                   | 10,310  |   |      |   | -      |   |   |   | -      |   |   |      | -      |   |   |   | 10,310 |   |
| Other Borrowings                                        |   |                   | 20,000  |   |      |   | -      |   |   |   | 20,000 |   |   |      | -      |   |   |   | - |   |
|                                                    |   | $                      | 136,619 |   |      | $      | 35,896 |   |   | $      | 61,140 |   |   | $         | 6,823  |   |   | $ | 32,760 |   |

|                         |   | Jun-09 |        |   | Dec-08 |   |
|------------------------------|--------|--------|-------------|--------|--------|--------|
| Commitments to extend credit |   | $      | 112,567,000 |   |   | $      | 147,187,000 |   |
| Standby letters of credit    |   | $      | 4,058,000   |   |   | $      | 4,134,000 |   |

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|                                              |   |         |   |   |   |   |   | Minimum     |   |
|---------------------------------------------------|--------|--------------|--------|--------|--------|--------|--------|-------------|--------|
|                                              |   | Company      |   |   |   |   |   | Regulatory  |   |
|                                              |   | Consolidated |   |   | Bank   |   |   | Requirement |   |
| Total Capital to Risk Weighted Assets             |   |         | 10.8   | %      |   |   | 10.9   | %           |   |   | 8.0 | % |
| Tier 1 Capital to Risk Weighted Assets            |   |         | 9.6    | %      |   |   | 9.7    | %           |   |   | 4.0 | % |
| Tier 1 Capital to Average Assets (Leverage Ratio) |   |         | 7.1    | %      |   |   | 7.1    | %           |   |   | 4.0 | % |

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|                             |   | 3-Month                |    |   | 6-Month |   |    | 1-Year |   |
|----------------------------------|--------|------------------------|---------|--------|---------|--------|---------|--------|--------|
|                             |   | (Dollars In Thousands) |    |
| Regulatory Defined               |   |                   |    |   |    |   |    |   |   |
| Rate Sensitive Assets (RSA)      |   | $                      | 232,687 |   |    | $      | 350,847 |   |   | $ | 518,095 |   |
| Rate Sensitive Liabilities (RSL) |   |                   | 175,912 |   |    |   | 325,561 |   |   |   | 555,293 |   |
| RSA minus RSL (Gap)              |   | $                      | 56,775  |   |    | $      | 25,286  |   |   | $ | (37,198 | ) |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Gap Ratio (RSA/RSL)              |   |                   | 1.32    |   |    |   | 1.08    |   |   |   | 0.93 |   |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |

|                             |   | 3-Month                |    |   | 6-Month |   |    | 1-Year |   |
|----------------------------------|--------|------------------------|---------|--------|---------|--------|---------|--------|--------|
|                             |   | (Dollars In Thousands) |    |
| Regulatory Defined               |   |                   |    |   |    |   |    |   |   |
| Rate Sensitive Assets (RSA)      |   | $                      | 674,208 |   |    | $      | 714,503 |   |   | $ | 790,953 |   |
| Rate Sensitive Liabilities (RSL) |   |                   | 459,662 |   |    |   | 608,983 |   |   |   | 840,315 |   |
| RSA minus RSL (Gap)              |   | $                      | 214,546 |   |    | $      | 105,520 |   |   | $ | (49,362 | ) |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Gap Ratio (RSA/RSL)              |   |                   | 1.47    |   |    |   | 1.17    |   |   |   | 0.94 |   |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Management-Adjusted              |   |                   |    |   |    |   |    |   |   |   |   |   |
| Rate Sensitive Assets (RSA)      |   | $                      | 677,409 |   |    | $      | 720,119 |   |   | $ | 799,038 |   |
| Rate Sensitive Liabilities (RSL) |   |                   | 468,695 |   |    |   | 626,267 |   |   |   | 872,022 |   |
| RSA minus RSL (Gap)              |   | $                      | 208,714 |   |    | $      | 93,852  |   |   | $ | (72,984 | ) |
|                             |   |                   |    |   |    |   |    |   |   |   |   |   |
| Gap Ratio (RSA/RSL)              |   |                   | 1.45    |   |    |   | 1.15    |   |   |   | 0.92 |   |

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| Market      | Effect on Net Interest Income |
|-------------|-------------------------------|
| Rate Change | Gradual                       | Immediate |
| +300 bps    | 18.63%                        | 35.47% |
| +200 bps    | 16.31%                        | 23.24% |
| +100 bps    | 9.72%                         | 11.11% |
| -25 bps     | -2.00%                        | -2.00% |

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ITEM 

ITEM 

| Name                          |   | Votes For |   | Votes Withheld |
|-------------------------------|--------|-----------|--------|----------------|
|                          |   |      |   |           |
| Walter W. Carroll, II (2012)  |   | 7,063,877 |   | 277,095        |
|                          |   |      |   |           |
| James L. Dewar, Jr. (2012)    |   | 7,056,798 |   | 284,175        |
|                          |   |      |   |           |
| Thompson Kurrie, Jr. (2012)   |   | 7,077,449 |   | 263,253        |
|                          |   |      |   |           |
| John E. Mansfield, Jr. (2012) |   | 7,079,032 |   | 261,941        |

| Votes For |   | Votes Against |   | Votes Abstained |   | Broker Non-Votes |
|-----------|--------|---------------|--------|-----------------|--------|------------------|
| 4,674,138 |   | 593,931       |   | 18,477          |   | 2,054,425        |

| Votes For |   | Votes Against |   | Votes Abstained |   | Broker Non-Votes |
|-----------|--------|---------------|--------|-----------------|--------|------------------|
| 7,009,370 |   | 96,773        |   | 80,031          |   | 154,797          |

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Table of Contents

ITEM 

ITEM 

|   | 3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K dated May 13, 2009). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | Written Agreement with the Federal Reserve Bank of Atlanta and the Georgia Department of Banking and Finance, dated July 14, 2009 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated July 20, 2009). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | Form of Amendment to Investment Agreement. |
|--------|------|--------------------------------------------|

|   | 10.3 | Compensatory Arrangement with Thompson Kurrie, Jr. dated April 28, 2009, the terms of which are described on the Registrant’s Current Report on Form 8-K dated April 28, 2009. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | Employment Termination Agreement among PAB Bankshares, Inc., The Park Avenue Bank and M. Burke Welsh, Jr., dated April 6, 2009 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated April 6, 2009). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5 | Consulting Agreement among PAB Bankshares, Inc., The Park Avenue Bank and M. Burke Welsh, Jr., dated April 6, 2009 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated April 6, 2009). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1 | Rule 13a-14(a) Certification of CEO |
|--------|------|-------------------------------------|

|   | 31.2 | Rule 13a-14(a) Certification of CFO |
|--------|------|-------------------------------------|

|   | 32.1 | Section 1350 Certification of CEO |
|--------|------|-----------------------------------|

|   | 32.2 | Section 1350 Certification of CFO |
|--------|------|-----------------------------------|

SIGNATURES

| PAB BANKSHARES, INC. |   |            |   |   |
|----------------------|--------|-----------------|--------|--------|
|                 |   |            |   |   |   |   |
| Registrant           |   |            |   |   |   |   |
|                 |   |            |   |   |   |   |
| Date:                |   | August 10, 2009 |   | By:    | /s/ Donald J. Torbert, Jr. |   |
|                 |   |            |   |   | Donald J. Torbert, Jr. |
|                 |   |            |   |   | President and Chief Executive Officer |
|                 |   |            |   |   | (principal executive officer of the registrant) |
|                 |   |            |   |   |   |   |
| Date:                |   | August 10, 2009 |   | By:    | /s/ Nicole S. Stokes |   |
|                 |   |            |   |   | Nicole S. Stokes |
|                 |   |            |   |   | Senior Vice President and Chief Financial Officer |
|                 |   |            |   |   | (principal financial officer of the registrant) |

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